Perth based junior miner Hammer Metals with a market cap of just $5m has done a deal with one of the world’s largest miners, Newmont Mining in a $15m farm in deal.
Under the terms of the deal, Newmont Exploration Pty Ltd, a subsidiary of Newmont Mining will spend up to USD$10.5m or AUD$14.7m to earn a 75% interest in selected Hammer prospects that form part of the company’s Mt Isa project in Queensland.
The three Hammer prospects included in the deal are Overlander, Even Steven and the Dronfield prospect.
Newmont can initially lock down 35% of the project by spending USD$1.45m within two years of which USD$500k must be spent within 9 months before Newmont can elect to withdraw.
Newmont can then take its stake in the project through to 65% by spending another USD$3.05m within 2 years of securing the initial 35%.
At that point Hammer can elect to enter a contributing JV or at Hammer’s option, Newmont can increase their stake to 75% by spending a further USD$6m or by funding a feasibility study.
Hammer can also elect to have their share of the costs funded by Newmont all the way up until production in return for handing over another 5% of the project. Those monies will be repaid by Hammer to Newmont from future production.
The joint venture is targeting an Ernest Henry style copper-gold deposit (approximately 220 million tonnes at 1.1% Cu and 0.5g/t Au).
Hammer Metal’s who will retain ownership of all of their other Queensland prospects will become the exploration manager for the project up until such time that Newmont achieve 65% equity in the project.
Hammer’s CEO Alex Hewlett said: “Newmont’s contribution gives our exploration budget a major boost. It allows Hammer to accelerate exploration on three of its highly prospective iron oxide copper gold targets at Overlander, Even Steven and Dronfield whilst independently advancing exploration on the other IOCG systems it has generated over the last two years.”
“The Joint Venture area is part of a largely overlooked IOCG province on the doorstep of Mount Isa that hosts a number of large previously unrecognized alteration systems with key untested structural and mineralogical indicators of IOCG deposits. The large size of the mineralizing systems and evidence of the target mineralisation provides strong encouragement for the discovery of a major deposit.”
By Matt Birney
