Superior Resources (ASX:SPQ) has entered an earn-in and joint venture (JV) agreement with South32 (ASX:S32,OTC Pink:SOUHY) in order to advance exploration at its wholly owned Nicholson zinc project in Queensland.

The first stage of the JV will see South32 fund an initial AU$2 million, or 4,000 meters, worth of drilling within the first year of operations; funding is set to begin immediately.

The company will have the option to move forward to a second stage by contributing an additional AU$4 million towards exploration efforts within the following four years.

Fulfillment of Stage 2 by South32 would earn the company a 70 percent stake in Nicholson. The company would later have the opportunity to gain an extra 10 percent by funding a prefeasibility study within six months of Stage 2’s completion. Superior would remain the JV operator until the completion of Stage 2.

“The initial exploration program is targeting up to three Tier 1 equivalent, drill-ready Mount Isa style lead-zinc-silver targets, which we believe could be similar in size to the McArthur River and Century deposits,” Superior Managing Director Peter Hwang said in a statement.

“The earn-in and JV agreement with South32 is a significant milestone for Superior’s lead-zinc strategy. It validates the potential of the project to host a world-class base metals deposit and ensures that we will be fully funded to complete the substantial drilling program within the first year of the JV.”

According to Hwang, drilling is set to begin upon the completion of an aboriginal cultural heritage survey, currently scheduled for June 2019.

Nicholson consists of two exploration permits, but the project is situated in Queensland’s Carpentaria zinc province, which hosts approximately 20 percent of the world’s zinc inventory, as per Superior.

Superior’s share price leaped 16.67 percent on the ASX on Wednesday (May 29), ending the day at AU$0.007. Meanwhile, South32 was down 2.33 percent on Wednesday, closing at AU$3.36.

As of Tuesday (May 28), zinc was trading at US$2,737 per tonne on the London Metal Exchange.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.