Balcatta-based mineral explorer Conquest Mining Ltd has signed a joint venture agreement with South African company Gold Fields Ltd's Australian subsidiary, allowing it to earn a 51 per cent stake in part of its Central Queensland landholdings.
Balcatta-based mineral explorer Conquest Mining Ltd has signed a joint venture agreement with South African company Gold Fields Ltd's Australian subsidiary, allowing it to earn a 51 per cent stake in part of its Central Queensland landholdings.
The full text of a company announcement is pasted below
Binding agreement to create a gold exploration Joint Venture pursuing the potential discovery of a new mineralised district
Conquest Mining Ltd ("Conquest") (ASX:CQT) is pleased to announce that Gold Fields Australasia Pty Ltd ("GFA"), a wholly owned subsidiary of Gold Fields Ltd ("Gold Fields") (JSE, NYSE, DIFX: GFI), has entered into a binding Joint Venture Agreement ("JVA") to earn a 51% interest in part of Conquest's Central Queensland landholdings ("Regional JV Area").
The Regional JV Area comprises 8 exploration tenements covering an area of some 1,600 km2. Within the Regional JV Area is an excluded zone of approximately 7 km2 where Conquest has progressed its Mt Carlton project (including the outstanding Silver Hill deposit) and is presently undertaking pre-feasibility work with a view to developing an open pit mining operation.
Ed Baltis, Regional Manager of GFA, stated "Gold Fields is very pleased to be working with Conquest on the joint venture, which represents our largest greenfields exploration commitment worldwide. We look forward to commencing an aggressive and comprehensive exploration programme to test targets on the Regional JV ground".
During the 51% earn-in phase Conquest will continue to solely develop its Mt Carlton project while Gold Fields undertakes exploration within the Regional JV Area. Upon satisfying predetermined drill length based criteria and minimum exploration spend, GFA has an option to increase its interest in the Regional JV Area by acquiring a further 24 % (increasing its total interest to 75%) and will also have an option to purchase a 50% interest in the Mt Carlton project.
The involvement of Gold Fields will help realise material upside in Conquest's exploration acreage within the Regional JV Area. In the medium term the agreement affords Conquest the means to pursue a dual path of becoming a producer, via development of the Mt Carlton project, whilst maintaining an aggressive exploration program on the now recognised highly prospective surrounding Regional JV Area.
John Terpu, Managing Director of Conquest said "Conquest is extremely happy to have a partner with the capacity and quality of Gold Fields. We believe the expertise and support Gold Fields brings to the joint venture will add significant value to the project. By ensuring that projects with high potential are well funded, we are providing Conquest with significantly greater expenditure leveraging whilst still maintaining a significant interest in these projects."
Peter Rea, Conquest's Exploration Manager said "We believe the complex and extensive nature of the Mt Carlton geological systems suggest this may be a major new mining province. Four deposits have been discovered to date with total resources of 12.6 million tonnes @ 2.11 g/t gold, 5.2 g/t silver, 0.3% copper. The Silver Hill discovery is a first for Australia, being a high sulphidation acid sulphate deposit with similarity to a number of giant South American
deposits. We have completed 20,000 metres of drilling in the last 6 months, with a target of 40,000 metres drilling for the year. If Conquest had to complete 150,000 metres on the Regional JV area it would cost us a minimum of $30 million."
Gold Fields is the 4th largest gold producer in the world with a market capitalisation of $11 billion. The company produces over 4moz of gold annually, and has significant ore reserves of 94moz and resources of 215moz. Gold Fields has operating mines in South Africa, Australia, Ghana, and Venezuela as well as a developing project in Peru. Furthermore the company has a fully funded global exploration portfolio with substantial technical expertise, labour and equipment.
Gold Fields' interest in Conquest is not limited to the JVA; it currently holds in excess of 10% of the company's issued capital, making it Conquest's single largest shareholder.
Conquest's financial advisor in respect of the JVA is Azure Capital.
Details of the abovementioned JVA
The key terms of the JVA are:
- Gold Fields has the opportunity to earn a 51% interest in the Regional JV Area by completing 150,000 metres of drilling (the Drilling Requirement) within three years.
- Gold Fields is obliged to expend at least $5 million in respect of the Regional JV Area in the first 12 months of the JVA.
- Upon meeting the Drilling Requirement, Gold Fields has the right to increase its interest in the Regional JV by 24% (to 75%) for an amount calculated based on a weighted average of Gold Fields' expenditure incurred in meeting the Drilling Requirement and an independently determined NPV for the Regional JV Area.
- Upon meeting the Drilling Requirement, Gold Fields also has the right to acquire a 50% interest in the Mt Carlton project based on an independently determined NPV.
- Gold Fields will establish its own exploration team to staff the Regional JV Area, with the understanding that Gold Fields and Conquest will, where possible, share resources to most efficiently and cost effectively allow the exploration activities of both companies to proceed.
- Conditions precedent comprise ratification by both company's Boards, SARB approval and a due diligence within 60 days.
