PERTH (miningweekly.com) – Western Australian gold hopeful Gascoyne Resources has inked a C$25-million transaction with TSX-V-listed gold miner Momentum Mining to divest of a 50% stake in its key gold projects.

Under the terms of a heads of agreement (HoA), Momentum would acquire a 50% interest in the Dalgaranga, Glenburgh and Mt Egerton gold projects, in exchange for 100-million of its own shares, or a 19.6% shareholding.

“This is a significant step forward for the company, as it not only provides a funded path to development and production for the company’s advanced gold projects, but it also introduces a successful and experienced operations group to Gascoyne’s projects,” said Gascoyne MD Mike Dunbar.

The alliance would be further cemented by a 50:50 joint venture (JV) over the three properties, with Gascoyne to manage the jointly funded exploration phase, while Momentum would carry Gascoyne’s share of mine development costs. These would be repayable from production revenue.

The three gold projects currently have a combined resource of 1.76-million ounces of gold, and were covered by granted mining leases.

Meanwhile, Momentum has agreed to obtain and maintain a matching 19.6% shareholding in Gascoyne through a series of share placements.

Momentum would purchase about 20-million shares in the Australian gold junior, at a price of 25c each, to raise at least A$5-million. Some four-million of these shares would be issued within five days of the HoA, subject to TSX-V approval, while the balance of the shares would be issued within ten days of closing the transaction.

Momentum would purchase a further A$2.5-million Gascyone shares, to be priced at 29c each, within 12 months of the transaction. Gascoyne would allow the Canadian firm to hold a 15.31% shareholding for a period of three years.

The funds generated by the Momentum placement would allow Gascoyne to implement exploration programmes on the JV acreage, the company said.

Subject to the completion of the placements, Gascoyne has agreed to issue options to Momentum, which could be exercised at a price of 29c each, to increase Momentum’s stake in the company to 19.6%, and to grant Momentum the right to maintain this shareholding for the next three years.