Nickel-focused producer Western Areas has entered a farm-in and joint venture (JV) with Iluka Resources over the Western Gawler exploration area in South Australia.
Western Areas will have the right to acquire up to 75 per cent of base, precious and rare earth metal and mineral interests at five tenements across the Western Gawler region, while Iluka will retain its rights to mineral sands. The five tenements are named EL 5217, EL 5452, EL 5675, EL 5878 and EL 5879.
The key focus for Western Areas is to gain access to the remainder of the Fowler Domain that falls within Iluka’s Eucla Basin project area. The Fowler Domain, at the western end of the Gawler Craton, is considered highly prospective for nickel, iron oxide, copper and gold.
Western Areas managing director Dan Lougher said that the opportunity to extend the company’s presence at Western Gawler offered significant discovery potential.
“We have made it very clear that, with our positive cashflow generation, we would look to access opportunities where the initial investment is relatively low, but the potential rewards are high,” he said.
“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.”
The agreement will take place in two stages. The first stage will see Western Areas acquire a 51 per cent JV stake in metal rights at the five tenements by spending $2.75 million within three years with a minimum of $0.75 million in the first year and $1 million in the second and third years.
Following this phase, Western Areas may enter stage two to earn a further 24 per cent (for a total of 75 per cent) by spending a further $3 million over another four years.