Japan Gold (TSX-V:JG) has secured nearly C$45 million ($45.38 million) in investments from Solidcore Resources (AIX:CORE) to advance exploration across its Japanese gold portfolio.
Solidcore, the gold producer formerly known as Polymetal International, says it will commit C$35 million in funding towards five areas within Japan Gold’s portfolio.
The exploration commitment is expected to cover work across the areas over three years, with Japan Gold receiving an annual management fee of US$500,000 ($710,995), included in the exploration budget, to oversee the programs.
Upon completion of the C$35 million expenditure, Japan Gold and Solidcore will form joint ventures over each project, with respective interests of 51% and 49%.
Solidcore sees ‘long-term value‘
Once the joint ventures are formed, Solidcore will have the right to increase its interest in any joint venture to 70% by solely funding a Prefeasibility Study within three years.
It can then increase its stake to 80% by funding a Bankable Feasibility Study over the following three years.
Japan Gold would then have the option to fund its remaining 20% interest through to production or sell its stake to Solidcore.
“We have assembled a highly prospective and strategically important portfolio in one of the world’s best yet underexplored gold jurisdictions,” Japan Gold Chairman and CEO John Proust says.
“The alliance with Solidcore creates a meaningful opportunity to leverage our technical and operational expertise across district-scale targets in Japan.”
Solidcore CEO Vitaly Nesis says Japan Gold’s portfolio contains large-scale, underexplored gold districts close to past-producing mines, which he believes have the potential to create “significant long-term value”.
The investment forms part of Solidcore’s broader push to expand across Asia following its exit from Russia. In July, the company formed an exploration joint venture in Oman.
The company is one of the world’s largest gold mining companies, producing approximately 400,000 ounces from its two operating mines last year.
Equity investments, royalty sale
Alongside the exploration partnership, Solidcore will become a major shareholder in Japan Gold through a private placement.
The Kazakhstan-based miner will purchase C$9.45 million of Japan Gold units at C$0.12 each. This gives it an 18.81% interest in the company, or 19.9% on a partially diluted basis.
Separately, Equinox Partners Investment Management, Japan Gold’s major shareholder, bought approximately C$1 million in additional shares and converted a US$2 million debenture into shares to maintain its 29.3% ownership.
Japan Gold says it is now debt free after the conversion.
Moreover, the company will receive US$3 million after OR Royalties (TSX:OR) exercised its right to an additional 0.5% royalty across Japan Gold’s properties, increasing its existing royalty interest from 1.5% to 2%.
Japan Gold says the combined proceeds from the private placements and royalty sale will be used to advance the remaining 22 projects in its portfolio.
Builds on Barrick exploration work
The Solidcore partnership follows Japan Gold’s previous five-year exploration alliance with Barrick Mining (TSX:ABX), which ended last year after approximately C$23 million of spending.
According to Japan Gold, the investment was primarily used to establish a comprehensive geochemical and geophysical database covering most of its mineral rights.
The database spans approximately 3,000km² across Japan’s three main islands, providing Japan Gold with an extensive exploration dataset as it advances its portfolio with new partners.
Japan Gold is the largest mineral exploration company in Japan, with a portfolio covering regions known for gold mineralisation and a history of epithermal gold production.
Write to Jackson Chen at Mining.com.au
Image: Japan Gold
