Greatland Gold Signs US$65m Farm-In Agreement with Newcrest to Advance Havieron
Tuesday, March 12th, 2019
Farm-in agreement includes Joint Venture and Tolling Principles which reflect the intention of both parties that, subject to a successful exploration program and positive Feasibility Study outcome, ore from the proposed Havieron Joint Venture will be toll processed at Newcrest’s Telfer Gold Mine
Additionally, during the farm-in period, Newcrest will have a first right of refusal over the remainder of Greatland’s Paterson project (Black Hills, Paterson Range East and remaining areas of Havieron licence)
Greatland Gold plc (AIM:GGP), the precious and base metals exploration and development company, is pleased to announce that the Company, and its wholly-owned subsidiary Greatland Pty Ltd, have signed a farm-in agreement with Newcrest Operations Limited (“Newcrest”), a wholly owned subsidiary of Newcrest Mining Limited (ASX:NCM), Australia’s leading gold producer and one of the world’s largest gold mining companies, to explore and develop Greatland’s Havieron gold-copper project in the Paterson region of Western Australia (the “Farm-In Agreement”).
Highlights of the Farm-In Agreement
- Newcrest has the right to acquire up to a 70% interest in 12 blocks within E45/4701 that cover the Havieron target (the “Tenement Blocks”) by spending up to US$65m (roughly £50m or AUD$90m) and completing a series of exploration and development milestones in a four-stage Farm-in over six years.
- After meeting the milestones in the four-stage Farm-in (set out below), Newcrest has the option to acquire an additional 5% interest at fair market value taking Newcrest’s interest in the Farm-in to 75%.
- Newcrest will have the right but not the obligation to acquire up to an initial 70% Farm-in Interest in the Tenement Blocks in accordance with the following four-stage farm-in procedure:
- Stage 1: Newcrest incurs US$10 million in expenditure (inclusive of the Minimum Commitment of US$5 million) in relation to the Tenement Blocks (the “Stage 1 Commitment”) within a period of 12 months;
- Stage 2: If Newcrest incurs an additional US$10 million in expenditure in relation to the Tenement Blocks (the “Stage 2 Commitment”) within a period of 12 months from the date following satisfaction of the Stage 1 Commitment, Newcrest will earn a 40% Farm-in interest;
- Stage 3: If Newcrest incurs an additional US$25 million in expenditure in relation to the Tenement Blocks and delivers a Pre-Feasibility Study for a project on the Tenement Blocks (the “Stage 3 Commitment”) within a period of 24 months from the date following satisfaction of the Stage 2 Commitment, Newcrest will earn an additional 20% Farm-in Interest (cumulative 60% Farm-in interest);
- Stage 4: If Newcrest completes and delivers, or incurs no less than US$20 million in expenditure toward the carrying out of, a Feasibility Study for a project on the Tenement Blocks (the “Stage 4 Commitment”) within a period of 24 months from the date following satisfaction of the Stage 3 Commitment, Newcrest will earn an additional 10% Farm-in Interest (cumulative 70% Farm-in interest).
- Newcrest must incur US$5m in expenditure within 12 months of the Farm-in commencing (the “Minimum Commitment”).
- Newcrest will act as Manager during the Farm-in period and it is expected that drilling at Havieron will recommence in April 2019, under Newcrest’s management and at Newcrest’s expense, and subject to Newcrest receiving all required regulatory and heritage approvals.
- The current intention of both parties is that, subject to a positive Feasibility Study outcome, the ore from the proposed Havieron Joint Venture will be toll processed at Newcrest’s Telfer Gold Mine (“Telfer”), which sits approximately 45km to the west of Havieron, delivering material economic and operational benefits for both parties. These include:
- lower upfront capital costs (no requirement to build a new processing plant);
- ability to leverage all existing infrastructure at Telfer (roads, airport, power, water);
- reduced time to production and first cash flows; and
- potential for a significantly higher net present value for the project than if a new processing plant and supporting infrastructure was required.
During the Farm-in period, Newcrest will have a first right of refusal over the Black Hills (E45/4512) and Paterson Range East (E45/4928) licences. Additionally, during the Farm-in period and the term of the proposed Joint Venture, Newcrest will have a first right of refusal over those blocks within the Havieron licence (E45/4701) not included in the Tenement Blocks.
A link to the map of the Tenement Blocks and Greatland’s Paterson licences can be found on the Greatland Gold website at: https://greatlandgold.com/paterson/
Gervaise Heddle, Chief Executive Officer of Greatland Gold, commented: “We are delighted to welcome Newcrest as our chosen partner for accelerating the exploration and development of Havieron. Greatland will receive tremendous benefit from Newcrest’s experience as a developer and producer at Telfer and Newcrest’s broader understanding of the geology of the Paterson region. 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.
“The terms of the Farm-in agreement recognise both the exciting potential of the Havieron project and the significant value that has been added to the project through a series of systematic exploration campaigns by Greatland since it was acquired in September 2016. Additionally, we believe that Newcrest’s first right of refusal over the remainder of Greatland’s Paterson project (the Black Hills and Paterson Range East licences and the areas of the Havieron licence not included in the Tenement Blocks) represents a strong endorsement of the attractiveness and prospectivity of our licences in the region.
“In summary, we are very excited about the future of Havieron and the Paterson region more generally and we believe that this agreement with Newcrest will serve as a foundation on which we can build Greatland into a large and successful business delivering significant returns to our shareholders.”
Fraser MacCorquodale, Newcrest General Manager Exploration, commented: “We are excited to partner with Greatland Gold on this opportunity. The Paterson province is a great place for gold-copper ore bodies. Leveraging our existing operations at Telfer represents an opportunity to create value for both companies and their shareholders.”https://greatlandgold.com