Classic Minerals has signed an earn in and joint venture (JV) agreement over its Fraser Range operations with Independence Group.
Under the agreement, Independence will continue to advance the Fraser Range project, allowing Classic to focus on the exploration of its Kat Gap gold project in the Forrestania region of Western Australia.
Independence will make an initial cash payment to Classic of $300,000 within five days of receiving ministerial consent for the transfer of tenure within the first year of grant.
The agreement gives Independence the option to earn a 51 per cent interest in the project by spending $1.5 million on exploration over two years.
It also outlines that a minimum expenditure of $640,000 is required before Independence can withdraw from the deal.
Following the first earn in period (two years), after a further cash payment of $500,000, Independence can elect to either form a joint venture (49 per cent Classic / 51 per cent Independence) or increase its interest to 70 per cent by spending a further $1 million over two years.
Independence will also be given the option to buy out Classic’s 49 per cent interest for $2.25 million and a one per cent net smelter royalty (NSR).
Should Independence elect to buy-out Classic, the company would have received an aggregate value of $4.55 million in cash and tenement expenditure, while retaining a one per cent NSR.
Classic chairman John Lester and chief executive officer Dean Goodwin jointly commented that the agreement demonstrated the “highly prospective nature of [the] Fraser Ranger tenements.”
“Independence is a highly regarded exploration and mining company…their commitment to inject cash and tenement expenditure to a maximum of $4.55 million and providing a one per cent NSR gives the company confidence in the value of these tenements,” they said.
“This agreement helps to simplify our company and allows the company’s exploration team to focus its efforts on the emerging high-grade Kat Gap gold project in the Forrestania region of WA”