Gold Terra Resource has signed an option agreement with gold mining company Newmont to acquire the past-producing high-grade gold mine, Con Mine, in the Northwest Territories, Canada.

Under the agreement, Gold Terra will acquire Miramar Northern Mining Limited (MNML) from Newmont Canada FN Holdings (Newmont FN).

The transaction includes 100% of all the assets, Crown mineral claims, mineral leases, and surface rights comprising the Con Mine, in addition to the areas immediately adjacent to the mine.

Newmont FN and MNML are wholly owned subsidiaries of Newmont.

In exchange, Gold Terra will incur $6.3m (C$8m) in exploration expenditures over a four-year period and undertake a pre-feasibility study of a mineral resource and a minimum of 1.5Moz in all categories.

The firm will also obtain the regulatory clearance required to purchase and transfer MNML’s assets and liabilities.

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By GlobalData

Gold Terra will make a final cash payment of $6,327,460 (C$8m), upon deal completion.

Furthermore, Newmont signed a subscription agreement with Gold Terra to complete a strategic investment of $1.18m (C$1.5m) in the latter.

As a result of the agreement, Newmont will own less than 5% of the Gold Terra issued and outstanding common shares.

Gold Terra plans to use the proceeds from this investment for exploration expenditures on the Con Mine property.

Owned by MNML, the Con Mine produced more than 6.1 Moz along the Campbell Shear structure.

Gold Terra expects the option agreement to allow it to fully explore 100% of the Campbell Shear structure at the Con Mine.

Gold Terra executive chairman Gerald Panneton said: “This new option agreement to acquire 100% of MNML’s Con Mine is a significant step for Gold Terra to increase our resource base with high-grade ounces along the prolific Campbell Shear structure and to add to our current inferred mineral resource.

“The additional land package along the Campbell Shear, and all the surface access assets and associated infrastructure will allow Gold Terra to accelerate its exploration strategy with the aim of adding a target of 2Moz of high-grade resources base to sustain the development of the project in the future.”

The agreement also replaces and supersedes the initial exploration agreement.

Panneton added: “We see considerable efficiencies through the optionality to acquire all of MNML’s assets which comprise multiple valuable mining assets, including the 1,950-metres deep Robertson shaft, and 100% of the Campbell Shear, which remains open to the south and at depth.”

Newmont will retain a 2% net smelter returns royalty (NSR) on minerals produced from the Con Mine Property.

The firm will have an option to exercise its back-in right of a 51% participating interest in MNML and the Con Mine property within two years after Gold Terra exercises its option.

For this, Newmont is required to refund a $6,327,460 (C$8m) cash payment to Gold Terra and make a $30 payment per ounce of gold for 51% of the total ounces reported in the technical report, among others.