Traka Resources signs Farm-in and JV with Western Areas

THE BOURSE WHISPERER: Traka Resources (ASX: TKL) has entered into a Farm-in and Joint Venture Agreement with Western Areas (ASX: WSA).

The agreements cover five exploration licences located in the Jameson area of Western Australia, which forms part of Traka’s Musgrave project.


The Musgrave project showing Traka’s interests including the Western Areas Agreement tenements. Source: Company announcement


According to Traka, Western Areas has identified the Musgraves as a prospective underexplored base metals region.

“The Agreement will result in an immediate acceleration of exploration activity particularly focused on the discovery of higher grade, intrusive-related nickel and copper deposits,” Traka Resources said in its ASX announcement.

“A number of prospective targets and areas have already been identified and work will initially focus in these locations.

“The area covered by the Agreement includes key ground around the known mineralised trend, which hosts the Nebo-Babel and Succoth deposits held by BHP Billiton (ASX: BHP).

“The agreement introduces a partner into Traka’s Musgrave project with both the resources and expertise to pursue and exploit the higher grade style of poly-metallic mineralisation being sought.

“Western Areas has a remarkable track record of discovery and mine development in the Forrestania area of Western Australia and Traka will obviously benefit from this experience.”

Traka’s agreement with Western Areas relates to exploration licences EL69/2032, 2230, 2253, 2618 and 2747.

Western Areas may earn in to Traka’s interests in these tenements via an initial $200,000 payment to Traka as partial reimbursement of Traka’s incurred exploration expenditure.

Stage 1:

Western Areas may earn the right to 30 per cent equity by expending $1.3 million within 18 months of the date of the agreement, with a committed expenditure of $1 million. Western Areas may withdraw after expending the committed expenditure without retaining any residual interest.

Stage 2:

In the event that Western Areas earns a 30 per cent equity, it can elect to earn an additional 21 per cent equity by further expending $2.5 million within an additional 18 month period. If Western Areas elects to cease expenditure during this stage, a joint venture will be formed with Traka having 70 per cent equity and Western Areas having 30 per cent equity.

Stage 3:

If Western Areas earns 51 per cent equity by having expended a total of $3.8 million, it can elect to increase its equity to 70 per cent by the expenditure of a further $5 million within an additional 3 year period and agreeing to free-carry Traka through to completion of a Bankable Feasibility Study.

Traka explained the effect of this earning provision being Western Areas would carry the company for a minimum of $5 million expenditure even if it completes a BFS prior to completing that expenditure.

If completion of the BFS requires Western Areas to incur costs in excess of $5 million Traka would be carried for such additional expenditure.