Magmatic Resources (ASX:MAG) has executed a Farm-in and Joint Venture agreement with FMG Resources, a wholly owned subsidiary of Fortescue Ltd (ASX:FMG), to explore the Myall Project in central west New South Wales.
In addition, Fortescue will make a strategic investment, subscribing for 75,946,151 shares in MAG, to become a 19.9% cornerstone investor.
The Myall Project consists of EL 6913, a contiguous 244 sq. km tenement covering the northern extension of the Junee-Narromine Volcanic Belt.
The project hosts significant porphyry-associated copper-gold mineralisation within a similar geological setting to the Northparkes copper-gold mine 50 km to the south. Evolution Mining recently purchased 80% of Northparkes, with the balance held by Sumitomo Metals Mining and Sumitomo Corporation. Over the preceding two years, Magmatic has completed extensive exploration in the Corvette and Kingswood prospect areas of the project, culminating in an initial Mineral Resource Estimate for the area of 110Mt at 0.27% Cu, 0.07g/t Au and 0.8g/t Ag.
In addition, Fortescue will make a strategic investment, subscribing for 75,946,151 shares in MAG, to become a cornerstone investor.
“We are excited to joint venture and partner with Fortescue to advance our exploration efforts across the Myall Project area. Myall has many of the signatures of a Tier 1 copper-gold deposit and Magmatic has recognised the need to partner with a major to further advance the project following the maiden Resource,” Magmatic Resources Executive Chairman David Richardson said.
“Fortescue’s cornerstone investment in MAG will allow the company to simultaneously advance our other two projects at Wellington North and Parkes which are strategically located near Alkane Resources Boda-Kaiser deposits and Tomingley Gold Operations respectively.”
Significant terms include:
- Fortescue may earn a 51% initial interest in the Myall Project by incurring $6M in expenditure on exploration in the initial earn-in period of up to four years. This includes a minimum expenditure of $3M on exploration (including a minimum of 3,000 metres of drilling) within the first two years.
- Fortescue can then earn an additional 24% interest (for a total interest of 75%) by incurring an additional $8M in expenditure on exploration over an additional two years.
- During the initial earn-in period, MAG, via its wholly owned subsidiary MOD, will operate and conduct all exploration activities as directed by an Exploration Committee that will comprise two members from each party. MAG will be entitled to a 10% operator’s fee.
- Upon earning a 51% interest in the Myall Project, a joint venture (JV) will commence and Fortescue will sole fund and manage exploration activities.
- On a decision to mine being made, if MOD elects to not contribute to development of the project then Fortescue has a pre-emptive right to purchase MOD’s JV interest for fair market value, and a final matching right in relation to a third party sale of MOD’s JV interest.
- At the end of the earning period, funding reverts to a standard contribute or dilute joint venture. If MOD’s JV interest falls below 10% for any reason, then Fortescue will be entitled to purchase MOD’s remaining JV interest at 90% of the fair market value.
