LONDON (Alliance News) - Metals exploration and development company Greatland Gold PLC on Tuesday said it had signed a USD65 million farm-in agreement for the Havieron gold-copper project in Western Australia.
Shares in Greatland Gold were up 19% at 2.19 pence in London on Tuesday.
The agreement was signed with Newcrest Operations, a wholly-owned subsidiary of Sydney-listed Newcrest Mining Ltd, and includes joint venture and tolling principles.
The intention is that, provided the exploration programme succeeds and the feasibility study is positive, ore from the Havieron joint venture will be toll processed at Newcrest's Telfer gold mine.
Newcrest has the right to acquire up to a 70% interest in 12 blocks that cover the Havieron target, known as the Tenement blocks, by spending up to USD65 million and completing a number of exploration and development milestones over a six-year period.
There are four stages to the farm-in, the first being for Newcrest to incur a USD10 million expense in a 12 month period. This is to be followed by another USD10 million for another 12 months in stage two. Once stages one and two are complete, Newcrest's interest in Havieron will be 40%.
Stage three involves Newcrest spending a further USD25 million and delivering a pre-feasibility study in the 24 months following the completion of stage two. This will grant Newcrest another 20% interest and will take its total farm-in interest to 60%.
Finally, in stage four, Newcrest must complete and deliver - or else incur no less than USD20 million of expense in the production of - a feasibility study for Havieron in two years to earn another 10% and take its interest to 70%.
Once Newcrest has met the milestones within the four-stage farm-in, it has the option to acquire another 5% interest at fair market value, which would take its Havieron interest to 75%.
At a minimum, Newcrest must spend at least USD5 million on Havieron within 12 months of the farm-in commencing.
Greatland Gold Chief Executive Gervaise Heddle said: "We believe that this deal represents a win-win for both parties due to the potential for significantly reduced capital costs and increased efficiency resulting from ore being toll processed at Newcrest's nearby Telfer mine. Moreover, Newcrest's expertise should help fast track Havieron through to a completed feasibility study and, subject to positive outcomes, into production and positive cash flow."
Throughout the farm-in period, Newcrest has first right of refusal over the Black Hills and Paterson Range East licences. Newcrest also will have first right of refusal over blocks within the Havieron licence, aside from the Tenement blocks, both during the farm-out and throughout the duration of the joint venture.
Greatland Gold (GGP)