Gold Road Resources Limited and a wholly owned Australian subsidiary of Gold Fields Limited have formed a joint venture with equal partnership to develop and operate Gruyere project.
The deal includes the Central Bore, Attila and Alaric deposits and the YAM14 and Toto Prospects comprising 144km².
The Gruyere Gold Project is located 200km east of Laverton in Western Australia.
Gold Road will retain complete ownership of the remaining North Yamarna tenements that cover an area of nearly 2,300km².
Under the deal, Gold Fields will buy a 50% interest in Gruyere project from Gold Road for a cash consideration of A$350m ($269.67m).
Gold Fields will pay A$250m when the transaction is complete and the remaining A$100m will be contributed to fund Gold Road’s initial expenses during the construction phase.
The agreement also stated that Gold Fields will pay an uncapped 1.5% net smelter return royalty once total gold production exceeds two million ounces.
This transaction is subjected to FIRB and other customary approvals.
Gold Road's team will help develop the Gruyere under management and leadership of Gold Fields.
Both parties have agreed on the development programme and capital budget for this venture.
The Gruyere Gold Project will proceed to the construction phase that includes finalisation of EPC, bulk earthworks and power supply contracts, the purchase of long lead time items and continuing front-end engineering and design.
After this transaction, Gold Road expects to secure a strong financial position.
It plans to accelerate the exploration programmes in the 50%-owned Gruyere and South Yamarna JV tenements, 100%-owned North Yamarna tenements.
This financial stability will also help the company proceed with future capital management initiatives.
Gold Road managing director and CEO Ian Murray said: “We are very pleased to have concluded a highly accretive transaction for shareholders, and to have Gold Fields as our chosen joint venture partner, and with who we look forward to having a long and successful partnership.”
Image: Gruyere joint venture tenement map. Photo: courtesy of Goldroad.com.