By: Dylan Sikes - AllPennyStocks.com News

Tuesday, May 14, 2013

Many resource players have taken it in the pocketbook in 2013 with fleeting prices of miners and earth drillers. Although we tend to pay more attention to companies on the Toronto Stock Exchange or United States’ exchanges for obvious reasons, the value of resource companies have taken a hit globally. The valuation depreciation and negative outlook that some analysts have put forth towards the metals business also contributes to the reasoning that more companies may be teaming-up across the globe in exploration efforts on promising properties. Take for example, OZ Minerals Limited, an Australian-listed company that has shed more than 40 percent of its value in the past three months, despite a solid first-quarter performance. The company owns and operates the producing Prominent Hill copper-gold mine as well as the advanced-exploration-stage Carrapatena copper project in South Australia. More than 20,000 tons of copper and nearly 38,000 ounces of gold were produced by OZ in the first quarter of 2013.

The company says that it is seeking organic growth and it apparently sees an opportunity in land controlled by Firesteel Resources Ltd. (TSX-Venture:FTR) in British Columbia. Firesteel reported on Tuesday that it has inked an option and joint venture agreement with OZ Exploration Pty Ltd., a subsidiary of OZ Minerals Limited, pertaining to Firesteel’s ROK Coyote property in northwest BC. The term sheet grants OZ the right to acquire up to a 70-percent interest in ROK Coyote.

ROK Coyote is one of five properties in Firesteel’s portfolio of projects.

In order to earn the interest, OZ must make cash payments of $500,000 over 43 months and incur exploration expenditures of $8.0 million in the same time frame. If OZ chooses to move forward upon completing these conditions, another $1.0 million payment is due to Firesteel.

Further, if OZ continues exploration, Firesteel will have a once only election to agree to fund its 30-percent share of expenditures on a go forward basis through to completion of final construction and commissioning of a mine. If Firesteel elects to forego that route, OZ can acquire another 10 percent of the project through another $5.0 million in exploration costs.

OZ will be appointed as the operator of the Property and will have the exclusive and sole responsibility of administering and carrying out the exploration programs on the Property.

Pending customary approvals and due diligence, the companies anticipate a Definitive Agreement to move forward with the transaction by July.

The ROK Coyote asset lies between the North ROK property of Colorado Resources Ltd. (TSX-Venture:CXO) and the Red Chris property of Imperial Metals Corp. (TSX:III). Colorado Resources recently announced a cut of 0.5 percent copper and 0.67 g/t gold over 333 meters at their project. Imperial reports Red Chris having reserves in excess of 300 million tonnes grading 0.359 percent copper and 0.274 t/g gold, providing for a nearly three-decade mine life at a milling rate of 30,000 tonnes per day.

"We have eight on trend targets on the property and believe the best opportunity to reward shareholders is by partnering with a major mining company such as OZ Minerals. OZ Minerals has the funding, experience and expertise to make ROK Coyote a viable project," said Michael Hepworth, Interim President and chief executive of Firesteel in a statement today.

The news hasn’t done anything productive for shares of Firesteel in Tuesday trading action, with shares declining more than 20 percent as the session closes. It could be some “sell on news” mentality, though, as shares have grown 350 percent (from bottom to top) in the past three weeks. Shares hit some tough resistance at 18 cents with the run that started at 4 cents on April 25. Shares are printing 14 cents at the close on May 14th which still holds the vast majority of the gains from the previous climb.

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