Australian firm Altamin has signed a binding term sheet with Appian Natural Resources Fund II to develop the Gorno Zinc project in Italy.

According to the agreed terms, the two firms will establish a joint venture (JV) to operate and fund the development of the project, which has the potential to become a strategic long-life asset.

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The project is planned to start production in Q1 2024.

Global specialist mining private equity fund Appian will invest up to A$94m ($65m) in the JV to earn up to 67.4% in the project. This amount will be paid in two tranches.

The first tranche of A$14.5m ($10m) will be used for expanded exploration and infill drilling, as well as a definitive feasibility study. In exchange, Appian can earn up to a 29.9% interest in the project.

Appian will pay A$79.6m ($55m) under the second tranche to fund the project construction following a final investment decision (FID), in exchange for an additional 37.5% stake.

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Altamin will retain a 32.6% holding in the zinc project once it is funded for commercial production, based on the Scoping Study criteria.

Altamin managing director Geraint Harris said: “This funding enables our work programme to be significantly expanded to test the significant near mine exploration potential and expand the resource footprint at Gorno, therefore maximising project and shareholder value, whilst significantly reducing equity dilution and finance risk for our shareholders.

“Altamin and Appian are aligned on this strategy and the partnership with Appian also brings a wealth of new exploration and mine development experience to our team.”

The signing of the term sheet concludes Altamin’s evaluation of different options for the development of the Gorno Project. It aims to minimise financing risk while maximising project value.

Appian founder and CEO Michael W Scherb said: “Appian is excited to partner with Altamin on the development of Gorno, a high-quality asset with a highly prospective resource and strong local support, to realise the full potential of this project and deliver value to all stakeholders.”