Inomin Mines has signed a non-binding term sheet with Sumitomo Metal Mining Canada for a joint venture (JV) to develop the Beaver-Lynx nickel project in British Columbia.

The agreement, which is subject to due diligence, could see Sumitomo earn up to an 80% interest in the project by investing at least C$8m ($5.73m) in exploration activities.

The JV will proceed in two phases, with Sumitomo initially investing C$3m for a 60% interest, followed by an additional C$5m investment to acquire a further 20% stake.

During the initial earn-in period, Inomin will act as the project operator, receiving a fee equivalent to 10% of exploration expenditures.

Inomin will also be reimbursed by Sumitomo for a portion of exploration costs incurred during the term sheet exclusivity period, contingent upon the execution of a definitive agreement.

Sumitomo is currently undertaking due diligence on the project's claims, with both parties aiming to finalise and execute a definitive agreement following successful due diligence.

The Beaver-Lynx property, spanning 25,350 hectares, is strategically located in south-central British Columbia, near the city of Williams Lake and adjacent to Taseko Mines' Gibraltar project, one of Canada's largest open-pit copper mines.

The site benefits from excellent infrastructure including all-season roads, proximity to hydroelectric power and active railway lines.

Inomin holds a 100% interest in the Beaver-Lynx project, which is free from royalties. Previous exploration including drilling has indicated the presence of significant nickel volumes.

The project's initial drilling and metallurgical test results, combined with its district-scale size, suggest that Beaver-Lynx has the potential to become a significant source of nickel.

Inomin president John Gomez said: “We are delighted to partner with Sumitomo, a leading international resource project developer and producer, to advance Beaver-Lynx.

“With Sumitomo's involvement, we believe Beaver-Lynx's large mineral resource potential will be realised, and the property could develop into another major mine in a mineral and infrastructure-rich district.”

In August this year, Iamgold and Sumitomo announced the start of commercial production at the Côté Gold Mine in Ontario, Canada.