Midnight Sun Mining Corp (TSX-V:MMA, OTCQB:MDNGF) has struck a deal to acquire up to an 80% interest in a Zambian licence that geophysical data suggests may host an extension of its high-profile Dumbwa mineralized trend.
The company entered into an earn-in and operating agreement with Mulundu Holdings covering the 62 square kilometre Mulundu Licence, adjacent to its Solwezi Project.
Recent geophysical interpretation indicates the Dumbwa Trend may bend northwest onto the property, prompting Midnight Sun to move quickly to secure it.
"Our recent geophysical work at Dumbwa has demonstrated a remarkable correlation with the known mineralized trend," CEO Al Fabbro said, adding that a reinterpretation of the system suggests it shifts northwest near the top of the geochemical anomaly, potentially extending onto the Mulundu Licence.
"When we recognized this, securing Mulundu became a clear priority," he said, noting the acquisition has the potential to meaningfully expand the company's land package and the footprint of Dumbwa.
Midnight Sun plans to fold Mulundu into its ongoing Dumbwa exploration program, with early work focused on expanding geophysical and geochemical datasets across the licence to identify drill targets.
Under the four-stage agreement, Midnight Sun will pay Mulundu Holdings US$25,000 within a week of signing and secure environmental clearance from Zambian regulators, after which it can earn a 51% stake in the licence within 24 months by sole-funding C$750,000 in exploration spending. It then has the option to earn an additional 29%, for a total 80% interest, by sole-funding a further C$3 million over 36 months.
Once the earn-in and sole-funding are complete, the parties will form a joint venture to hold the licence, with each side funding its proportionate interest or facing dilution. A party diluted below 10% will see its stake converted into a 2% net smelter royalty, which Midnight Sun can buy out at any time for C$1 million.
Shares of Midnight Sun added about 2.5% on Monday.
