Carawine Resources Limited (ASX: CWX) announced that it has entered into a Farm-In and Joint Venture Agreement with FMG Resources Pty Ltd to explore three tenements of Carawine’s Paterson Project in Western Australia.
The company reported that Fortescue Metals Group Ltd would explore Carawine’s eastern Paterson Project tenements in Western Australia, which includes Lamil Hills (E45/5326), Trotman South (E45/4847), and Sunday (E45/5229) Tenements, targeting copper, gold and base metals.
The company said that the agreement provides Fortescue with a significant and highly prospective tenement holding within the Paterson Province while ensuring that Carawine is well-positioned to share in the benefits of any discovery.
As per the agreement, Fortescue would pay $125,000 cash up front and spend $0.5 million on exploration in the first eighteen months.
The company reported that Fortescue has the right to earn up to a 75% interest by spending $6 million total in two stages. Fortescue will earn 51% interest after $1.5 million exploration spend within three years in Stage 1; and 24% interest after additional $4.5 million exploration spend within four years in Stage 2.
This new JV complements Carawine’s recent farm-in and joint venture agreement with Rio Tinto Exploration Pty Ltd, with the potential for up to $11.5 million to be spent on exploration at the Paterson Project under both agreements.
The company noted that the recent addition of four new tenements not subject to farm-in agreements ensures Carawine retains a strong tenement position in the Paterson Province in its own right.
The Paterson project is situated in the Paterson Province at the eastern edge of the Pilbara Craton.
The project comprises six granted exploration licences and five exploration licence applications (one subject to ballot) over an area of about 1,500km2 across nine regions; Lamil Hills, Trotman South, Red Dog, Baton, Sunday, Cable, Puffer, Eider, and Magnus.
JV with Rio Tinto for two tenements
Carawine already has a farm-in and joint venture agreement with Rio Tinto Exploration Pty Ltd, a wholly owned subsidiary of Rio Tinto Limited, whereby RTX have the right to earn up to 80% interest in the Baton and Red Dog tenements by spending $5.5 million in six years to earn 70% interest and then sole funding to a prescribed milestone.
Carawine’s partnership with FMG
Carawine reported that it has entered into a Farm-In and Joint Venture Agreement a JV with Fortescue Metals Group Ltd to explore Lamil Hills, Trotman South, and Sunday tenements of Paterson Project.
Lamil Hills is within 30km to the northwest of Newcrest Mining’s Telfer gold-copper mine; Trotman South is 30km to the south of the Telfer mine; and Sunday is within 5km of Metals X’s Maroochydore copper-cobalt deposit.
The company reported that the tenements are at an early exploration stage, with Carawine’s work to date comprising target generation activities based mostly on work by previous explorers.
Key terms of the agreement
The terms state that Fortescue should pay Carawine A$125,000 in cash within 30 days of execution of the Agreement and must spend at least A$500,000 within the first eighteen months of the Agreement before it can withdraw.
The agreement then gives Fortescue the right to earn a 51% interest in the Tenements by spending A$1.5 million on exploration within three years, inclusive of the Minimum Obligation. Once Fortescue has earned a 51% interest in the Tenements, a Joint Venture will be formed.
The agreement states that Fortescue may elect to earn an additional 24% interest in the Tenements by spending an additional A$4.5 million on exploration over an additional four years during which Carawine will be free carried.
The terms dictate that once Fortescue has earned the additional 24% interest in the Tenements, bringing its total interest in the Tenements to 75%, Carawine has the right to contribute to further exploration expenditure according to its interest, or dilute.
In case ortescue elect not to proceed with the Additional Farm-In, Carawine has the right to contribute to exploration expenditure according to its interest, or dilute.
The agreement also states that if any party’s interest in the Tenements falls to below 5%, then the other party has the right to purchase that interest at fair market value.
Four new tenement applications
Carawine reported that it has 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 1km of Metals X’s Nifty Copper operation.
Carawine reported that it will continue to progress these tenements towards grant and evaluate their exploration potential in this highly prospective and sought-after exploration region.
The Company said that it will then look to generate targets on which to focus further exploration, either in its own right or by seeking suitable partners.
Carawine Managing Director David Boyd said: “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.
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.”