Toronto-based exploration company Xplore Resources Corp. said on June 7 that it has entered into a definitive agreement to acquire a 51% interest in the Diamond Mountain Phosphate Project from Revival Gold Inc., Toronto. The project is 30 kilometers northeast of Vernal, Utah. The remaining 49% interest is held by Utah Mineral Resources LLC, Kaysville, Utah.
Diamond Mountain includes a 547-hectare State Mining Lease situated adjacent to Simplot Phosphates LLC, a current producer of phosphate concentrates, which are transported by pipeline to their fertilizer processing facility in Rock Springs, Wyo., for conversion into various fertilizer products.
“We are very pleased to have reached an agreement with Revival to acquire an initial 51% interest in the Diamond Mountain phosphate project,” said Xplore President and CEO Wes Hanson. “Our financial advisors suggest strong underlying fundamentals in phosphate supply and demand, with projected long-term demand growth of at least 2% per annum solely based on agricultural demand.
“This is one of the top ten undeveloped phosphate projects in the world that is not owned by a major fertilizer producer,” he continued. “Located in the state of Utah, in a resource-focused economic enclave where phosphate ores have been continuously mined since the 1960s, made this a compelling acquisition to consider. We see an opportunity to rapidly and cost effectively convert the currently identified inferred resource to the measured and indicated classification through systematic exploration drilling.
“We believe Diamond Mountain offers both short- and long-term value creation for our shareholders, especially in light of recent disruptions in global phosphate deliveries and a renewed increase in demand due to the resurgence of lithium-iron-phosphate (LFP) batteries for the burgeoning electric vehicle market,” Hanson added.
Xplore said the existing measured and indicated resource is estimated to be 26.8 million mt averaging 19.67% P2O5, in addition to an inferred resource estimated at 23.1 million mt averaging 19.67% P2O5. Phosphate mineralization at Diamond Mountain was originally identified by U.S. Steel Corp. in the mid-1960s, with additional drilling later conducted by Revival (formerly Strata Minerals Inc.).
Under the terms of the agreement, Xplore may acquire up to a 51% interest in the Diamond Mountain project by a C$250,000 cash payment on closing of the transaction; C$250,000 cash payment on the first anniversary of closing; and issuance to Revival of such number of common shares in the capital of Xplore as is equal to 19.9% of Xplore’s issued capital upon completion of the financing.
Closing of the transaction is subject to the completion of a minimum C$5 million financing by Xplore. Further financing details are to be released at a later date. Xplore said the closing of the transaction is expected to be completed by the end of June 2022.
The company noted that a financial advisory fee to an arm’s length party consisting of 2 million shares of Xplore will be issuable by Xplore as consideration for introducing Xplore to Revival and for other financial advice provided in connection with the acquisition, upon completion of the purchase of Revival’s interest in Diamond Mountain.
“Revival Gold has arranged to vend its noncore holding in Diamond Mountain to a growing new industrial minerals business in a transaction that will provide immediate cash proceeds and ongoing indirect participation in the asset,” said Revival Gold President and CEO Hugh Agro. “Upon closing, proceeds will be directed towards the company’s core focus in gold and advancing the Beartrack-Arnett gold project located in Idaho, USA.”
Revival Gold acquired its 51% interest in Diamond Mountain for exploration expenditures totaling approximately C$1.2 million through a joint venture earn-in agreement with Utah Minerals LLC in December 2014.