Western Areas in JV with Iluka

Nickel-focused Western Areas has signed a farm-in deal with Iluka Resources for a series of tenements in South Australia worth up to $5.8 million over the next seven years.

Under the joint venture agreement, Western can earn up to a 75 per cent stake in the base and precious metal rights for the five tenements, which are located in the Western Gawler region of South Australia.    

Western already holds tenements in the region, which is prospective for nickel and copper, and said the combined land holdings represented 100 per cent of the Fowler Domain.

Under the first stage of the deal, Western can acquire a 51 per cent stake by spending $2.8 million over three years.

The company can increase its stake to 75 per cent by spending a further $3 million in the following four years.

Iluka will retain all rights to mineral sand elements within the tenements.

Western Areas managing director Dan Lougher said the company had been contemplating a number of farm-in deals.

“Regional exploration sits alongside our Forrestania and Cosmos exploration programs,” he said.  

“We have been very clear that, with our positive cash flow generation, we would look to access opportunities where the initial investment is relatively low, but the potential rewards are high.

“Our exploration team is ready to begin a work program aimed at identifying high priority drill targets, building on the significant geophysical programs and target generation work that Iluka has completed over the last four years.”

Shares in Western were up 0.15 per cent at $3.26 each at 12pm AEDT, while Iluka shares were flat at $11.30 each.