Firetail spun out of Gascoyne Resources in early 2022 to explore for lithium, nickel and copper in Australia, but has decided to set its sights on the Americas with a $2.25 million cash and share deal to purchase an initial 60% interest in Valor's wholly owned Peruvian subsidiary Kiwanda.
Firetail can move to 80% in Kiwanda with the conversion of 20 million performance rights at key drilling milestones that will give Valor a 20.58% shareholding.
Near-term drilling
The deal positions Firetail to participate in the near-term drilling of copper-silver targets at Picha (80%), and to share a 20-30% interest in the nearby Charaque copper project where Valor secured a farm-out option for an 80% interest to Barrick Gold.
Barrick is already a major copper producer and explorer in South America, and Peru is the world's second largest producer of the red metal.
Firetail executive chair Brett Grosvenor and non-executive director Simon Lawson recently flew to Peru to look at the asset and meet the local in-country exploration team.
Grosvenor said he was impressed by the significant exploration program undertaken over the past 18 month which has identified large numbers of significant targets through surface work and geophysical surveys.
"Sampling and work to date is a clear reflection of the potential for a large-scale resource in an existing mining province," he said.
Cash neutral purchase
Firetail is raising A$5 million at 9c per share via a placement. Grosvenor and Valor chair (and proposed Firetail non-executive director) George Bauk aim to participate for up to $179,000 in the raising that is managed by CPS Capital.
Grosvenor described the deal as "providing a cash-neutral purchase position" given it will receive a portion of any farm-in payments made by Barrick for Charaque over the next four years.
Barrick has a five-year option over Charaque for US$800,000 cash up front, and between $500,000 and $3 million in exploration expenditure for 70%. Barrick can earn an extra 10% by funding a prefeasibility study and paying an additional $1 million cash.
All future cash payments will be split between Valor and Firetail on a 50:50 basis.
Picha covers some 200sq.km in southern Peru, 17km northeast of Buenaventura's 1.9 million ounce silver-gold project, while Charaque is 30km to the northeast and is surrounded by ground owned by Barrick, Teck Resources and Fresnillo.
Shareholders need to approve both the deal and placement.
Valor aims to focus on its uranium projects in Canada's Athabasca Basin, with drilling planned over the next year.
Valor shares were up 33% today at 0.4c, capitalising it at $15 million. It has traded at 0.3-1.1c over the past year.
Firetail shares have traded at 8-33.5c over the past 12 months and were off 4% today at 10.5c, valuing it at $8 million.
Firetail counts Chinese battery metal investor Shanghai Jayson New Energy Materials as a key shareholder.
