Great Western Exploration has signed a farm-in letter agreement with Sandfire Resources to explore its northern Yerrida copper tenements located in Western Australia.
Under the agreement, Sandfire can earn an initial 70% interest in the copper tenements by paying $500,000 in Sandfire shares with the commitment to invest a minimum of $1.7m in exploration until the delineation of 50,000t or more of in-ground copper resources.
The agreement provides Sandfire the right to 11 exploration licences that comprise an area of 1,560km².
Great Western Exploration managing director Jordan Luckett said: “The company is delighted that Sandfire has recognised the quality of our tenements and believes the farm-in agreement provides an excellent opportunity for both companies.
“Sandfire obtains access to what we believe is some of the best exploration areas in the emerging Yerrida copper province and in return, we get one of the best exploration teams in Australia exploring our tenements.
“The agreement also offers a clear pathway to production if a discovery is made.”
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Under the agreement, Sandfire can also earn additional 10% interest in the property by funding completion of the feasibility study to take its ownership to 80%.
Both companies are entitled to pre-emptive rights to the other party’s interest where an interest has been offered for sale to a third-party.
The agreement is subject to approvals required under the Mining Act and Sandfire completing a due diligence review for these copper tenements within 30 days of the contract's execution date.
Luckett added: "The farm-in agreement is enabling one of Australia’s most successful exploration teams to explore our northern Yerrida area with the considerable knowledge, understanding and experience gained through the nearby discoveries of Degrussa and Monty.
"The opportunity to develop a long-term partnership with Sandfire may also prove invaluable if we make a discovery on our 100% owned southern Yerrida areas, which the company considers to be equally prospective for VMS and sedimentary hosted copper-cobalt.
"The agreement with Sandfire provides the company with greater resources to focus on this and its other core projects, including the Yandal West Gold project."
Besides this transaction, Great Western Exploration has also acquired five exploration licences, which are included in the Sandfire farm-in agreement by issuing two million Great Western ordinary shares.
It has also agreed to reimburse the vendor Graz Pty Ltd’s direct costs in the tenements in the order of $66,000.