First Au (ASX:FAU) has entered an ore purchase agreement with Forrestania Resources (ASX:FRS), establishing a potential processing route for its Gimlet Gold Project.
The 24-month agreement provides access to Forrestania‘s Lake Johnston and Edna May processing infrastructure, subject to completion of Forrestania’s acquisition of Edna May.
Executive Chairman Daniel Raihani says securing a ‘credible’ processing pathway represents an important step in unlocking the value of FirstAu’s portfolio.
“For junior gold companies, access to processing infrastructure can be one of the most significant barriers between defining mineralisation and ultimately generating value from it,” Raihani says.
“This agreement provides FirstAu with a potential pathway to monetise suitable ore without the substantial capital cost and development timeframe associated with constructing our own processing facility.”
The agreement commences once conditions precedent are satisfied by 7 September 2028. These include Forrestania confirming readiness for commercial processing operations, FirstAu making a positive decision to mine at Gimlet, and obtaining necessary permits.
Under the terms, FirstAu must pay a $50,000 plant access fee on execution. The company cannot sell ore from Gimlet to third parties during the term, except for ore grading less than 1.00 grams per tonne gold (Au) if Forrestania declines first right of refusal.
Ore purchases operate under a formula-based pricing mechanism referencing base processing cost, grade relative to a base grade, metallurgical recovery rate, and treatment charge. Batches require 50,000–150,000 tonnes, capped at 2 million tonnes during the term.
Default triggers include recovering under 15,000 production ounces within eight months of commencement, or failing to deliver at least 12,000 dry metric tonnes of ore at an average grade of 3.00g/t Au or above in any two consecutive delivery months.
FirstAu remains responsible for haulage and transit insurance.
The agreement can be terminated for material breach, default, or if gold prices fall below $5,250 per ounce or exceed $7,250 per ounce on a rolling 30-day basis.
First Au is a mineral explorer focused on discovering gold and base metal projects in Western Australia.
Write to Paula Fabe at Mining.com.au
Images: First Au
