PERTH (miningweekly.com) – Copper miner Sandfire Resources on Monday announced it had signed a farm-in agreement with explorer Ventnor Resources to secure an 80% shareholding in the Thaduna/Green Dragon project, some 40 km east of the DeGrussa copper mine, in Western Australia.

With an up-front payment of A$3-million, Sandfire would acquire an immediate 35% interest in the project, with an option of increasing this shareholding to 80%, over two stages, by sole funding a further A$6-million on exploration and studies over the next four years.

The project currently has an indicated and inferred resource of 7.9-million tonnes, grading 1.8% copper and 3.7 g/t silver, for 142 000 t of contained copper and 945 000 oz of contained silver.

The resource comprises oxide, secondary sulphide and deeper sulphide mineralisation.

Previous drilling conducted by Ventnor had returned sulphide intersections at depth, indicating the potential to extend the mineralisation and increase the higher-grade sulphide component, and a scoping study completed in February this year outlined a potential production profile of 15 000 t/y of copper, over an anticipated mine life of ten years.

Sandifire MD Karl Simich said that there could be an opportunity, subject to further evaluation and technical studies, to process both the sulphide and oxide material contained within the resource.

The sulphide material was potentially amenable to processing through the existing DeGrussa concentrator, and the oxide material would be considered for processing as part of the DeGrussa oxide-copper project, which Sandfire was currently reviewing.

The oxide-copper project could produce between 6 000 t/y and 7 000 t/y of copper cathode, over a five-year period.

“The joint venture (JV) is structured to give us an option to move to 80% through a staged earn-in process, which will enable us to fully evaluate and test the resource and exploration potential before making a commitment to start feasibility work and move to development,” said Simich.

He noted that the agreement represented a low-risk option on a potentially attractive future organic growth project in the Doolgunna region, which could provide incremental ore feed to the DeGrussa mill, while at the same time giving Sandfire exposure to a grounds package with exploration potential.

Ventnor told its shareholders in a statement that the transaction presented substantial value to the company, by reducing capital costs for the project and lowering processing costs.

“The transaction allows the company to form a JV with Sandfire and assess the possibility of developing the project using Sandfire’s existing plant and infrastructure. This will substantially reduce the overall capital required and potentially bring forward the timing of achievement of first production and cash flow by a meaningful period,” said Ventnor MD Bruce Maluish.

He added that the JV would also remove the need for Ventnor to raise substantial finance, and would reduce the risk of project feasibility and development through a farm-out and funding solution, coupled with a toll milling arrangement at low operating costs.