Gold producer Ora Banda Mining has agreed to sell a stake in non-gold minerals rights on its Davyhurst tenements in Western Australia (WA) to Brenahan Exploration (BEPL), a subsidiary of Wesfarmers Chemicals, Energy & Fertilisers (WesCEF).

Under the deal, Ora Banda will sell a 65% stake in its mineral rights on the Davyhurst tenement package for a cash consideration of A$26m ($16.5m) and a 2% royalty.

Ora Banda and BEPL will also form a 65:35 JV to advance exploration work on the large unexplored Davyhurst tenement package.

BEPL will have the option to solely fund $15m of exploration work over a period of three years to increase its stake in the JV to 80%.

Ora said it is “free carried” from any discovery to completion of a definitive feasibility study (DFS) over the area that is applicable to that DFS.

Ora Banda managing director Luke Creagh said: “The Davyhurst tenement package is very large and has never had any sustained or modern exploration programmes, given its disjointed and under-capitalised historical ownership.

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“Although we have had encouraging early-stage lithium results, Ora Banda is a gold-focused company and given the underexplored nature and size of this belt, we expect it would take many years to do it justice for other minerals.

“In total, we view this as an A$45m dollar deal with A$30m in cash and A$15m in exploration expenditure. The deal structure is aligned to maximise the potential of multiple discoveries to the benefit of both parties whilst providing balance sheet strength to Ora Banda to further grow gold production.”

Subject to conditions precedent, the transaction is due to be completed in the first quarter of 2024.

To raise additional capital, Ora Banda has agreed to sell 1.5% of the 2% royalty to be received from BEPL to Hawke’s Point for a consideration of A$4m.