Western Areas, Gunson, and Monax consolidate SA tenements

THE BOURSE WHISPERER: Western Areas (ASX: WSA) has executed Farm-in and Joint Venture Agreements with Gunson Resources (ASX: GUN) and Monax Mining (ASX: MOX).

The Agreements provide for Western Areas to acquire up to a 90 per cent interest in a number of tenements within the Western Gawler region of South Australia.

The total area included under the proposed Western Gawler JV projects is approximately 2,746 square kilometres.

 

Project tenure and existing deep drilling, overlaying magnetics (TMI). Source: Company announcement

 

The deals are part of what Western Areas describes as its ‘regional exploration strategy’, which covers exploration programs external to the company’s “near mine” Forrestania tenements, utilising its cashflow position to effectively evaluate early to mid-stage exploration opportunities in an efficient and cost effective manner.

Western Areas explained the program targets opportunities with discovery potential for high-grade massive sulphide poly-metallic mineralisation.

In other words, Western Areas is aiming to increase its existing resource inventory through additional exploration success, in conjunction with other companies and their ongoing growth activities.

“Western Areas has been conducting due diligence on a number of farm-in and joint venture opportunities over the last six months as part of our regional exploration strategy and we believe the Western Gawler opportunity offers the significant discovery potential we are looking for,” Western Areas managing director Dan Lougher said in the company’s announcement to the Australian Securities Exchange.

“Regional exploration sits alongside our Forrestania exploration program and we have been very clear that with our positive cashflow generation that we would look to take first mover style opportunities where the initial investment is relatively low, but the potential rewards are high.

“Our exploration team is ready to immediately begin a work program aimed at identifying high-priority drill targets.”

The initial work program is planned to consist of detailed airborne geophysical surveys (Magnetics) over the project area to facilitate the geological interpretations, and allow for initial target generation using the higher resolution data.

A combination of drilling and further geophysics will then be used to screen the initial targets and generate further targets for detailed assessment.

Key Terms of the Agreement with Gunson include:

Western Areas may earn interests in the Gunson JV tenement (EL4440) by:

Stage 1:
Western Areas may acquire 75 per cent interest in the tenement by spending $0.8 million within 2.5 years of the Agreement date. Western Areas may withdraw at any time without having any residual interest.

Stage 2:
Western Areas can elect to earn an additional 15 per cent interest in the tenement by the additional expenditure of $0.4 million within an additional 18 month period. If Western Areas elects to cease expenditure during this stage, a joint venture will be formed with the Parties’ initial participating interests being Western Areas 75 per cent and Gunson 25 per cent.

Stage 2 Completion:
Following the completion of Stage 2, a joint venture will be formed with the Parties’ initial participating interests being Western Areas 90 per cent and Gunson 10 per cent. Gunson may convert its remaining 10 per cent tenement interest to a 1 per cent net smelter royalty.

Key Terms of the Agreement with Monax:
The terms of the Monax agreement (tenements EL5077, EL5199, EL5200) are the same as those of the Gunson agreement except for a minimum committed expenditure of $0.4 million, over 1.5 years within Stage 1, before Western Areas may withdraw.

Website: www.westernareas.com.au