Ivernia West has reached agreement with Celtic Resources to acquire the Ballinalack zinc/ lead deposit in Co Westmeath. The deal involves Ivernia spending £300,000 on exploration over the next three years. If production goes ahead on the deposit, Ivernia will pay $3 million to Celtic.

Once all payments have been made, Celtic will still be entitled to 3 per cent of all net profits made from the deposit.

The licence for Ballinalack is currently held by Celtic's subsidiary, Oliver Minerals.

The deposit contains a measured resource of 7.83 million tonnes of lead/zinc with a grading of 7.4 per cent.

According to the managing director of Ivernia, Mr David Hough, if minerals are mined at Ballinalack, they may be processed at Ivernia's existing operation at Lisheen, Co Tipperary, which is being developed in conjunction with Minorco.

The Ballinalack deposit has been held by several companies since the early 1970s.

Mr Sean Finlay, managing director of Celtic, said the company had entered the deal with Ivernia because it did not have the resources of an existing Irish operator like Ivernia.

He said Celtic's focus was now on developing its Nezhdaninskoye gold mine in the Russian republic of Sakha.

The $3 million payment will be paid on a staged basis.