Prodigy Gold NL (ASX: PRX) has announced the signing of an exploration farm-in and Joint Venture agreement with a subsidiary of Newmont Goldcorp Corporation (NYSE: NEM), over the highly prospective Tobruk Project in the Northern Territory.
As per the terms of the agreement, Newmont Goldcorp will sole fund up to A$12M in exploration expenditure to earn up to a 70% interest in the Tobruk Project. NEM will also provide a total of A$2.5M cash payments to Prodigy Gold of A$1.5M within 20 business days of signing and A$1M on election to proceed to Phase 2.
Prodigy Gold reported that it now has in excess of A$33M in funding agreements from JV partners to accelerate discovery across the Company’s entire exploration portfolio.
The Tobruk Project covers the prospective Tanami group rocks that host Newmont Goldcorp’s Callie Gold deposit and several smaller deposits including Groundrush and Titania-Oberon. Tobruk Project is located adjacent to Callie Gold Mine and has an analogous structural setting to it.
Earn-in and Joint Venture Agreement
PRX reported that it has signed a binding exploration farm-in joint venture agreement valued at AUS$14.5M with Newmont Exploration Pty Ltd, a wholly owned subsidiary of NEM. The Agreement covers Prodigy Gold’s tenements and tenement applications at the Tobruk Project.
This new Newmont Goldcorp JV increases Prodigy Gold’s total exploration earn-in from its three earning partners Newmont Goldcorp, Newcrest, and Gladiator to a maximum of A$33M, with foundations set for discovery.
Two Phases for Earn-In Agreement
There are two phases for Newmont’s earn-in agreement.
In Phase 1, Newmont Goldcorp has to make a non-refundable A$1.5 Million payment within 20 business days of signing the Agreement and can earn a 51% interest in the Project by spending A$6 Million on exploration on the Project over a period of four years. The agreement states that Newmont Goldcorp will be manager of the Project and gives the option for NEM to withdraw during Phase 1 after spending a minimum A$2.5 Million.
In Phase 2, Newmont Goldcorp is given the option to increase its interest in the Project to 70%. This can be done by making an additional cash payment of A$1 Million within 20 business days of electing to proceed to Phase 2 and spending an additional A$6 Million on exploration within three years from electing to commence Phase 2; or by defining a JORC resource of over 500koz.
Terms of JV
Prodigy Gold reported that the Joint Venture would commence after the completion of Phase 1 wherein Newmont Goldcorp earns a 51% interest in the Project.
PRX noted that the Newmont Goldcorp may then elect to earn an additional 19% interest in the Project to increase its aggregate interest to 70%, triggering the Phase 2 earn-in.
Possible 75% Stake
PRX said that after completion of the Phase 2 earn-in by Newmont Goldcorp, it may elect for Newmont Goldcorp to fund Prodigy Gold’s share of future expenditure and JV costs until the commencement of commercial production.
Following this, Newmont Goldcorp will be entitled to increase its interest in the JV property to an aggregate 75% interest and to recover all funds expended under the Financing Option from 75% of the sales proceeds due to Prodigy Gold.
Exploration Program from Q2
PRX said that the Tobruk Project exploration program is scheduled to commence Q2 CY19 in parallel with extensive (9,600m) drilling program at Lake Mackay JV Project with Independence Group.
Prodigy Gold Managing Director, Matt Briggs, said: “We are very pleased to be partnering with the world’s largest gold miner to fast-track the exploration of our Tobruk Project in the Tanami Province, a region which is considered the exploration destination of choice for several major gold producers.
Newmont Goldcorp has a long and successful history in the Tanami area including developing the nearby Callie Gold Mine into a world-class gold deposit and we are looking forward to leveraging Newmont Goldcorp’s extensive technical knowledge as work gets underway at Tobruk this quarter.
Prodigy Gold now has in excess of A$33M in funding agreements from JV partners to accelerate discovery across the Company’s entire exploration portfolio, including JV’s with Independence Group (70/30) and Newcrest Mining (earn-in stage) that have already generated high-quality targets which are currently being drilled.
Further, we remain committed to unlocking the value of our 100%-owned projects and the cash payment received from Newmont Goldcorp as entry into the Tobruk JV allows this strategy to continue at pace.”