PERTH (miningweekly.com) – Juniors Red 5 and Ardea Resources have inked a joint venture (JV) agreement over two gold projects in Western Australia.
Under the terms of the agreement, Red 5 will spend an initial A$1.5-million on exploration over a two-year period to gain an initial 60% interest in the Mt Zephyr and Darlot East gold projects, which is in close proximity to its own Darlot gold mine.
An additional 20% interest in the project tenements could then be earned by spending a further A$800 000 within three years from the start of the JV agreement, for a total 80% interest in the two project areas.
Ardea will remain free carried up to a decision to mine, after which the company could elect to contribute pro-rata or to dilute its shareholding. If Ardea’s diluted interest falls to below 10%, the company’s interest will convert to a 1.5% net smelter royalty.
Red 5 told shareholders on Thursday that the farm-in JV agreement supported the company’s multi-strand strategy to expand the Darlot mineral resource base, which includes regional bolt-on acquisitions in addition to comprehensive exploration being undertaken as part of the Darlot mining hub strategy.
“Following the recent delivery of the final feasibility study for the development of a bulk mining operation at King of the Hills, Red 5’s growth vision is based on the establishment of two separate production hubs at King of the Hills and Darlot,” said MD Mark Williams.
“This JV farm-in agreement with Ardea Resources provides an exciting opportunity for the discovery of gold resources within economic haulage distance of the Darlot processing plant, which is currently operating at one-million tonne a year throughput.
“Ardea’s grassroots exploration programmes have delineated a series of highly prospective targets, including the high priority Gale prospect, which shows interesting early-stage analogies to our 4.1-million-ounce King of the Hills deposit.”
Ardea told shareholders that the company was looking forward to working with Red 5 to realise the full potential of the assets, and had been impressed by Red 5’s success at the Darlot gold mine.
“Ardea will continue to consolidate its large West Australian project portfolio and focus on the development of the Goonarrie nickel/cobalt project and drilling of compelling nickel sulphide and gold exploration targets within the Kalgoorlie nickel project,” the company added.