Gold and base metals explorer Carawine Resources has entered into a Farm-In and Joint Venture Agreement with FMG Resources to explore Carawine’s Lamil Hills (E45/5326), Trotman South (E45/4847) and Sunday (E45/5229) Tenements.
|Carawine’s Paterson Project with Fortescue Agreement tenements shown in green.|
The Tenements are part of Carawine’s Paterson Project in Western Australia, and are at an early exploration stage, with Carawine’s work to date comprising target generation activities based mostly on work by previous explorers.
Carawine Managing Director David Boyd said the Agreement with Fortescue represents another great opportunity for the Company to realise the significant potential of its Paterson Project tenements.
“With the addition of Fortescue as a partner in the Paterson we now have two major resource companies funding exploration on our Paterson tenements. This Agreement gives Fortescue access to under-explored tenements over highly prospective ground” said Mr Boyd.
“This deal also ensures Carawine is well positioned to share in the benefit of any discoveries, with Fortescue well placed to support a potential development should the exploration activities be successful. We look forward to sharing the details of the exploration programs as they progress.”
“The Agreement with Fortescue represents a further endorsement of Carawine’s exploration targeting strategy, which has already led to the formation of active joint ventures with Rio Tinto Exploration in the Paterson province and with Independence Group NL in the Fraser Range region of WA.”
Key terms of the Agreement include:
• Fortescue will pay Carawine AU$125,000 in cash within 30 days of execution of the Agreement
• Fortescue must spend at least AU$500,000 within the first eighteen months of the Agreement before it can withdraw
• Fortescue then has the right to earn a 51 per cent interest in the Tenements by spending AU$1.5 million on exploration within three years, inclusive of the Minimum Obligation
• Once Fortescue has earned a 51 per cent interest in the Tenements, a Joint Venture will be formed
• Fortescue may then elect to earn an additional 24 per cent interest in the Tenements by spending an additional AY$4.5 million on exploration over an additional four years during which Carawine will be free carried
• Once Fortescue has earned the additional 24 per cent interest in the Tenements, bringing its total interest in the Tenements to 75 per cent, Carawine has the right to contribute to further exploration expenditure according to its interest, or dilute
• If Fortescue elect not to proceed with the Additional Farm-In, Carawine has the right to contribute to exploration expenditure according to its interest, or dilute
• If any party’s interest in the Tenements falls to below 5 per cent, then the other party has the right to purchase that interest at fair market value
As announced to the ASX on 28 October 2019, Carawine entered into a farm-in and joint venture agreement with Rio Tinto Exploration Pty Limited, a wholly owned subsidiary of Rio Tinto Limited to explore its Baton and Red Dog tenements in the western Paterson Province.
The agreement gives RTX the right to earn a 70 per cent interest by spending AU$5.5 million on exploration over six years and an additional 10 per cent interest by meeting certain discovery-related milestones. RTX have a minimum obligation comprising an aggregate of AU$0.5 million in cash and share subscription payments, and AU$1 million in exploration expenditure.
The combined terms of the Fortescue and RTX agreements represent a minimum commitment to Carawine of at least AU$2 million (aggregate of cash, share subscription and exploration expenditure), with the potential for up to AU$11.5 million to be spent on exploration under both agreements over the next six to seven years.
The Company also recently added four new tenement applications to its Paterson Project which are not subject to any farm-in or joint venture agreements. These include a large tenement immediately south and adjoining the Baton tenements, and tenements that extend to within 1 kilometre of Metals X’s Nifty Copper operation.
Carawine will continue to progress these tenements towards grant and evaluate their exploration potential in this highly prospective and sought-after exploration region. The Company will then look to generate targets on which to focus further exploration, either in its own right or by seeking suitable partners.