Newcrest Mining and Frontier Resources have entered into an Aus$19 million agreement for a farm-in proposal at the Mt Andewa gold porphyry project on New Britain Island.
The terms of the agreement include Newcrest completing an Aus$750,000 subscription of Frontier shares equaling 2.3% of the company, with the proceeds funding exploration of Frontier’s various tenements. Newcrest may also earn a 60% interest in Mt Andewa by spending Aus$15.25million between 2012 and 2016.
The agreement also takes in the nearby Mt Schrader exploration licence which is currently under application. Newcrest may earn a 60% stake in Mt Schrader by spending a further Aus$4 million.
Newcrest will have the option to acquire additional stakes in the project with further payments relevant to the portion of the ore reserve specified in future feasibility studies of Mt Andewa and Mt Schrader. Frontier would manage and operate the project exploration program during the minimum commitment period with Newcrest providing technical direction and support. After this period, Newcrest may elect to assume management of the exploration activities.
The proposed farm-in is subject to a number of conditions, including obtaining all necessary government and regulatory approvals.
Frontier’s chairman Peter McNeil says, “We are excited to have a company of Newcrest’s calibre as a shareholder and potential joint venture partner at the Andewa Project, and consider this announcement as endorsement of the potential of Andewa. Frontier will benefit from Newcrest’s expertise and capability in the ongoing efforts to unlock this potential.”
Newcrest’s executive general manager of minerals Colin Moorhead says, “Newcrest is pleased to establish this relationship with Frontier in accord with our strategy of seeking opportunities for early stage entry into high quality gold projects in the Asia Pacific region.”