Subiaco-based GBM Resources has signed an initial agreement with Tokyo-based Pan Pacific Copper, which could spend up to $55 million on the exploration and development of GBM's copper-gold projects in northwest Queensland.
GBM Resources announced today that it had signed a non-binding Letter of Intent with the Japanese copper group and aimed to complete a binding agreement by 31 January 2010.
If a formal Joint Venture agreement is concluded, Pan Pacific will earn a 51% interest in seven exploration permits and nine exploration permit applications in GBM's extensive portfolio of tenements in the Mount Isa region, by spending A$15 million within the first six years - including a firm commitment to spend at least $2 million in the first two years.
After earning its initial 51%, Pan Pacific will be entitled to increase its share of the venture to 90% by spending a further $40 million on exploration and development of the tenements over the following five years.
During the farm-in period, GBM will carry out all exploration activities for Pan Pacific on the Mount Isa projects, which cover 1,580 square kilometres of highly prospective multi-minerals ground in the Eastern Succession of the Mount Isa Inlier. This area is considered highly prospective for large Iron Oxide Copper Gold style deposits.
"The terms of the LOI have been reached after 5 months of negotiations including a field trip by Pan Pacific senior personnel. This is shaping up to be a very important agreement for GBM, which will enable us to fast track exploration of some highly prospective projects and potentially generate significant rewards for our shareholders," GBM Resources' Managing Director, Mr Peter Thompson, said.
"The terms of the agreement are a win for both parties, whereby the strategic objectives for both will be met if it leads to a world class copper - gold discovery. GBM can simultaneously accelerate the progress of the JV projects in the Mount Isa region in addition to maintaining its focus on the Brightlands Project."
Under the terms of the initial agreement, if Pan Pacific reaches a 90% interest in the JV at Mount Isa, GBM's 10% will be free carried through to the completion of a Bankable Feasibility Study. GBM has also agreed that, once production from the tenements commences, it will sell its interest in the minerals produced to Pan Pacific at prevailing market rates.