The share price of ASX-listed junior Magmatic Resources jumped more than 50% on Friday as the company announced a farm-in and joint venture agreement with iron-ore major Fortescue Metals.
The agreement covers exploration of the Myall project, in New South Wales, and is focused on copper/gold mineralisation within a similar geological setting to Evolution Mining’s nearby Northparkes mine.
“Myall has many of the signatures of a Tier 1 copper/gold deposit and Magmatic has recognised the need to partner with a major to further advance the project following the maiden resource,” said executive chairperson David Richardson.
Over the past two years, Magmatic has completed extensive exploration in the Corvette and Kingswood prospect areas of the project, culminating in an initial mineral resource estimate for the area of 110-million tonnes at 0.27% copper, 0.07 g/t gold and 0.8 g/t silver.
Fortescue will also make a strategic investment in Magmatic for about 75.9-million shares, becoming a strategic investor.
“Fortescue’s cornerstone investment in MAG will allow the company to simultaneously advance our other two projects at Wellington North and Parkes which are strategically located near Alkane Resources' Boda-Kaiser deposits and Tomingley Gold Operations respectively,” added Richardson.
Fortescue may earn a 51% initial interest in the Myall project by incurring A$6-million in expenditure on exploration in the initial earn-in period of up to four years. This includes a minimum expenditure of A$3-million on exploration within the first two years.
Fortescue can then earn an additional 24% interest (for a total interest of 75%) by spending an additional A$8-million on exploration over a further two years.