THE BOURSE WHISPERER: Clancy Exploration (ASX: CLY) and Ramelius Resources (ASX: RMS) have entered into a farm-in agreement on the Condobolin gold and base metal project in New South Wales.
Under the terms of the agreement, Ramelius has the right to earn 80 per cent of the Condobolin project by funding $2 million for exploration over four years.
Should Ramelius withdraw before reaching the 80 per cent mark, the project ownership reverts 100 per cent to Clancy.
Clancy will be carried to a decision to mine, at which point it will have the right to contribute its 20 per cent share of costs post decision to mine, or dilute according to standard industry provisions.
If Clancy’s interest dilutes to 5 per cent, it converts to a 2 per cent Net Smelter Royalty.
Ramelius will manage the project, however during the farm-in phase, that badge will be worn by Clancy and it will be entitled to a 10 per cent management fee on services provided.
Clancy believes the deal with Ramelius will strengthen its exploration program in NSW as it will provide exploration funding to test epithermal gold and base metal targets at Condobolin.
“We are pleased to have formed this partnership with Ramelius in what is a very challenging capital market for junior exploration companies,” Clancy Exploration managing director Gordon Barnes said in the company’s announcement to the Australian Securities Exchange.
“A review of the project completed late last year identified the requirement for a funding partner and we are looking forward to working with Ramelius to advance exploration at Condobolin,”
The Condobolin project is located in the central west of NSW immediately north of the Condobolin township.
According to Clancy Exploration it has a substantial mining history, predominantly as a base metals field (lead, zinc and copper), as well as gold.
Mineralisation at the project is hosted in epithermal-style quartz veins within the metasedimentary units of the Ordovician Girilambone Group.
Clancy and Ramelius anticipate work under the farm-in agreement to commence in the June 2015 quarter.