GFG Resources (TSX-V:GFG) has signed a definitive earn-in agreement with Barrick (TSX:ABX) for the Pen Gold Project in Ontario’s Timmins Gold District in Canada.
The transaction allows Barrick to earn an initial 60% interest in Pen by making aggregate cash payments of C$1.2 million ($1.21 million) to GFG, financing C$17.68 million in exploration and project expenditures, and delivering a National Instrument 43-101 technical report establishing a mineral resource of at least 1.5 million ounces of gold or gold equivalent within six years.
In turn, Barrick has committed to finance a minimum of C$4 million in qualifying expenditures within the first three years, including at least 5,000m of diamond drilling before the third anniversary, acting as operator during the initial earn-in period.
Cash payments include C$420,000 upon signing, followed by annual payments of C$130,000 for six years. If Barrick withdraws before satisfying the firm commitment, it must pay any shortfall directly to GFG in cash.
President and CEO Brian Skanderbeg says the proposed partnership represents a “significant value-creating opportunity” for GFG shareholders and a ‘strong’ endorsement of the scale and quality of the Pen Gold Project.
“The transaction provides for substantial partner-funded exploration, meaningful near-term drilling, and a pathway to advance Pen through resource definition and potentially feasibility, while GFG retains significant exposure to future success,” Skanderberg says.
“Pen is a large and highly prospective land package in the Timmins Gold District that requires the scale of investment contemplated under this transaction to fully evaluate its potential.”
Following completion of the initial 60% earn-in, the parties expect to form a 60:40 joint venture. Barrick may elect to increase its ownership to 70% by solely funding and delivering a preliminary economic assessment within two years, and to 80% by solely funding a Feasibility Study.
The 475km² Pen Gold Project is located approximately 50km southwest of Timmins.
GFG Resources is a precious metals explorer focused on district-scale gold projects in tier one mining jurisdictions.
Write to Paula Fabe at Mining.com.au
Images: GFG Resources
