Exploration company Carawine Resources has entered into a farm-in and joint venture agreement with Fortescue Metals Group in Western Australia.
Under the agreement, Fortescue subsidiary FMG Resources will explore Carawine’s Lamil Hills, Trotman South and Sunday tenements, which are part of the Paterson project at the eastern edge of the Pilbara Craton.
Carawine managing director David Boyd said the Fortescue agreement represented a great opportunity for the company to explore the Paterson project’s significant potential.
“This agreement gives Fortescue access to under-explored tenements over highly prospective ground,” Boyd said.
“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.”
The Fortescue agreement comes a month after Rio Tinto Exploration also endorsed Carawine’s exploration target strategy, when it entered into a farm-in and JV for the Carawine’s nearby Red Dog and Baton tenements.
It has also formed a JV with Independence Group for provinces in Western Australia’s Fraser Range region.
As part of the agreement, Fortescue will pay Carawine $125,000 cash up front and has a minimum obligation to spend $500,000 on exploration in the first 18 months of the agreement before it can withdraw.
It can then earn a right to 51 per cent interest in the tenements by spending $1.5 million on exploration within three years, including the minimum obligation. Once it earns a 51 per cent interest, a JV will be formed.
Fortescue may then elect to earn an additional 24 per cent interest in the tenements by spending a further $4.5 million on exploration over another four years, during which Carawine will be free carried.
If either Fortescue or Carawine’s interest in the tenements fall to below 5 per cent, the other party has the right to purchase that interest at fair market value.