Junior gold exploration company Thunder Mountain has finalised its previously-announced joint venture agreement with ISR Capital.

ISR Capital is expected to invest up to $18m into the venture, named Owyhee Gold Trust, to pick up a 75% participating interest in Thunder Mountain’s South Mountain Mine development project in Boise, Idaho, US.

The terms of the JV agreement stipulate a payment of $1m to Thunder Mountain as a buy-in cash payment and a work commitment of $2m by the end of 2013.

ISR Capital will earn a 25% interest in the project in exchange for these payments, while an additional $5m is expected to be invested to move the project into production over the next three years.

Thunder Mountain Gold has the option to retain a 49% interest in the project by limiting and spending ISR Capital’s investment of $8m.

The company could instead opt for a 25% participating interest if it chooses to expend an additional $10m earn-in by ISR Capital.

The joint venture is expected to start the exploration and development of the South Mountain Mine immediately and will be managed by a joint management team to be put together by both companies.

The scope of the work includes enlarging the Laxey and Sonneman tunnels to obtain a large metallurgical sample and conducting underground core drilling.

The project is estimated to produce 400t per day of multiple concentrates, which will be sold to a smelter.