FMG signs $8m in farm-ins

Fortescue Metals Group has agreed to a $6 million farm-in with Carawine Resources to explore its Paterson project in Western Australia, and a $2 million farm-in with Reward Minerals to explore its potash tenements in the McKay range.

Under the agreement with Carawine, FMG will pay $125,000 cash upfront and spend $500,000 on exploration in the first 18 months.

Carawine said in an announcement FMG could earn a 51 per cent interest in the Paterson project by spending $1.5 million on exploration within three years, after which a joint venture between the two companies would be formed.

Carawine said FMG could earn a further 24 per cent interest by spending an additional $4.5 million on exploration within four years.

FMG will explore Carawine’s Lamil Hills, Trotman South and Sunday tenements, as part of the Paterson project.

Carawine managing director David Boyd said the group now has two major resource companies funding exploration on its Paterson tenements.

“The agreement with Fortescue represents a further endorsement of Carawine’s exploration targeting strategy, which has already led to the formation of active joint ventures with Rio Tinto exploration in the Paterson province and with Independence Group in the Fraser Range region of WA,” Mr Boyd said.

“This agreement gives Fortescue access to underexplored tenements over highly prospective ground.

“This deal also ensures Carawine is well positioned to share in the benefit of any discoveries, with Fortescue well placed to support a potential development should the exploration activities be successful.”

Under the agreement with Reward Minerals, FMG is required to spend a minimum of $400,000 on exploration activities at the potash tenements north of Lake Disappointment.

Reward said FMG could earn an 80 per cent interest in the tenements by spending $2 million on exploration over a period of four years, after which a joint venture would be established.

Shares in Fortescue Metals Group were down 1.75 per cent to trade at $8.70, as at 3:25 AEDT.

Shares in Carawine Resources are trading at 26 cents per share while shares in Reward Minerals are trading at 10 cents per share.