Nickel and base metal explorer Breakaway Resources Ltd has entered into a strategic farm-in joint venture worth $3.5 million with Barra Resources Ltd, over an ambitious gold exploration programme at Breakaway's Kambalda West project in Western Australia.
The agreement will see gold exploration occur simultaneously while Breakaway carries out nickel drilling programmes on various nickel deposits in the project area.
Barra has committed to a first-year expenditure commitment of $750,000 and must must issue Breakaway with shares to the value of $300,000 on signing the farm-in agreement.
Barra Resources can earn up to a 70 per cent interest in the gold rights by spending a further $2.5 million on exploration over two and a half years, with Breakaway reducing to a 30 per cent interest.
Once Barra has earned a 70 per cent interest, Breakaway can either elect to contribute according to its interest or dilute to a 20 per cent free carried interest up to a Decision to Mine.
After this decision point, Breakaway can either contribute according to its interest or divest.
Breakaway will retain the rights to all other metals, including nickel, on the tenements.
Breakaway managing director Peter Buck said the agreement would result in a major gold exploration programme within the Kambalda West area, with Breakaway retaining exposure to any upside from a significant discovery at a time of strong exploration and investor interest in the gold sector.
"While our focus as a company is on nickel and base metal exploration, this represents an exciting strategic opportunity to advance the gold potential of our tenements at a particularly opportune time in the commodity cycle."
Mr Buck said drilling would commence shortly to test a number of targets located in close proximity to the Wattle Dam discovery.
