THE BOURSE WHISPERER: Pioneer Resources (ASX: PIO) informed the market of TSX-listed Novo Resources Corp.’s intention to enter into a US$30 million farm-in and Joint Venture agreement with Sumitomo Corporation of Tokyo, Japan, and its wholly-owned Australian subsidiary.
The aim of the JV is to advance Novo’s Egina project located approximately 80 kilometres south-southwest of Port Hedland in Western Australia.
The Egina project includes Pioneer Resource’s Kangan gold project, where Novo is currently earning an interest under a binding memorandum of agreement that has now been replaced with a new agreement on essentially the same terms that allows Sumitomo to become a party to it.
Pioneer retains a 30 per cent free-carried interest in the Kangan project up to a decision to mine, after which it becomes a contributing JV partner.
Pioneer explained that Sumitomo, via an Australian subsidiary, has agreed to join Novo in spending $460,000 within the next 18 months to earn a joint 70 per cent interest in the Kangan gold project.
Upon Novo and Sumitomo earning their combined 70 per cent interest, Pioneer is free-carried up to a decision to mine and thereafter contributes in proportion to its JV interest.
The Kangan gold project, currently held 100 per cent by Pioneer, forms a key part of Novo’s Pilbara exploration portfolio and sits within that company’s Egina project, which lies in the heart of the Pilbara conglomerate gold province.
“The addition of Sumitomo to the Kangan farmin/JV adds significant financial and technical power to support Novo’s efforts at the Kangan JV project, and we look forward to receiving results as exploration programs at Egina and Kangan advance,” Pioneer Resources managing director David Crook said in the company’s announcement to the Australian Securities Exchange.