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PERTH (miningweekly.com) – Gold major Newcrest Mining would spend up to A$20-million over an eight-year period at ASX-listed Mungana Goldmines’ Chillagoe project, in North Queensland, under a newly signed exploration agreement.
The two companies this week inked an agreement that required Newcrest to spend an initial A$3-million over the first 18 months of the agreement, and would have the option to sign a farm-in agreement to spend a further A$17-million over a 78-month period.
Under the farm-in agreement, Newcrest could earn a 70% stake in an unincorporated joint venture with Mungana, once it had spent A$20-million, and if a minimum of one-million ounces of gold or gold-equivalent mineral resource was discovered.
Mungana MD Tony James said the transaction represented a vote of confidence in the quality and potential of the Chillagoe project, which had already proven its potential for large-scale porphyry gold/copper deposits, as evidence by the Red Dome deposit, which was mined in the late 1980s and 1990s.
“Newcrest will bring the expertise and financial capacity required to undertake the sort of deep and large-scale exploration that is needed to discovery deposits of this scale,” James said.
In the meantime, Mungana would explore and develop its base metals deposits.
The arrangement with Newcrest would exclude the King Vol zinc deposit, the defined mineral resource at Red Dome and Mungana, and the Red Cap area, as well as the surface infrastructure and processing facilities located at the Mungana mine site.
These assets would form the centre of Mungana’s North Queensland zinc development strategy.
Mungana was currently the subject of an unsolicited takeover offer from Auctus Chillagoe, which was offering shareholders 13.5c a share for their stake in Mungana.
Mungana noted that the agreement with Newcrest might constitute a defeating condition of the unsolicited offer, but pointed out that the Newcrest agreement was deemed to be in the best interest of shareholders.
The miner had previously told shareholders to reject the Auctus takeover offer, labelling it opportunistic.