Alloy inks $4M farm-in deal with Doray

THE BOURSE WHISPERER: Investors with an eye for the gold sector have been wondering for some time what the next move may be of gold miner Doray Minerals (ASX: DRM) after successfully bringing its Andy Well gold mine on stream.

Those questions have been answered with the announcement that Doray has entered into a farm-in agreement with Alloy Resources (ASX: AYR) to explore that company’s prospective and underexplored Horse Well gold project, located in the north-eastern Goldfields of Western Australia.

Doray considers the Horse Well project to be an attractive exploration opportunity as it has many similarities with the highly endowed Yandal Belt to the south and its relative lack of recent systematic exploration.

“We believe, given the geology, structural setting and results achieved to date, that there is the potential for discovery of a significant gold deposit within the project area and we look forward to working with Alloy Resources to advance the project,” Doray Minerals managing director Allan Kelly said in ihis companiy’s announcement to the ASX regarding the deal.

The binding Heads of Agreement between the two entities includes the following key terms:

$100,000 cash payment to Alloy at Commencement;

Doray to spend $2 million within two years to earn 60 per cent, $900,000 of which is to be spent on non‐withdrawal expenditure within the first 12 months after commencement with Alloy to manage the initial agreed field exploration program;

Doray to spend a further $2 million within three years of commencement, at which time Alloy can elect to contribute pro-rata (at 40per cent) to this $2 million or dilute to 20 per cent using an industry standard formula, whereby Doray can earn up to 80 per cent and

Alloy to contribute from PFS and beyond (i.e. DFS, DTM and operational JV) or dilute to a one per cent NSR using an industry standard formula.

Alloy controls approximately 850 square kilometres of exploration tenements in the northern part of the Millrose Greenstone Belt located in the north-eastern Goldfields of WA.


Horse Well project geology and prospect locations. Source: Alloy Resources announcement


Those in the know have interpreted the Millrose Greenstone Belt to posess similar geology to the Yandal Greenstone Belt, which hosts the Nimary-Jundee, Bronzewing, Darlot and Mt McClure gold deposits.

Alloy’s leases cover approximately 50 strike kilometres of the belt, with Alloy estimating Mineral Resources totalling a combined 100,000 ounces of gold within the Horse Well project area, from four separate prospects, Palomino, Filly, Bronco and Filly SW.

Work completed by Alloy over the last two years has extended the prospectivity for new gold discoveries along the entire greenstone belt.

This has been a major part of the attraction for Doray with the company saying it believes there is potential to define a significant new gold deposit, similar to the plus-five million ounce Jundee and Wiluna mining centres located in adjacent greenstone belts.

Fortunately for all involved, Alloy Resources shares Doray’s confidence in the project.

Alloy said being able to strike such an agreement in current market conditions with a company that has runs on the board as Doray provides it with access to the requisite funding and technical expertise to continue an exploration program at Horse Well.

Alloy said both companies consider the Horse Well gold project to be a major new discovery.

A positive aspect to support that assertion is that Alloy has been able to bring the project to the point it has using the limited resources it has had to work with.

The company said it was excited about the results that a systematic fully funded program may bring.

A Mineral Resource of 100,000 ounces of gold has been established and over the last two years exploration has extended the prospectivity for new gold discoveries along the entire greenstone belt,” Alloy Resources said in its ASX announcement.

“The company and its new partner are focussed on defining a significant new gold discovery similar to the Jundee and Wiluna mining centres located in adjacent greenstone belts to the south.”