An earn-in and joint venture agreement between Andromeda Metals (ASX: ADN) and Evolution Mining (ASX: EVN) over the Drummond gold project in north Queensland will proceed to Stage 2 after Evolution confirmed it had met its initial exploration expenditure commitment.
Under Stage 1 terms of the agreement signed in August 2018, Evolution was required to spend an initial $2 million within the first two years before it could elect to proceed to the next stage.
The company met that commitment within the first 12 months and will now spend an additional $4m over the next two years to acquire an 80% interest in the project.
Andromeda is set to receive a $200,000 cash payment from Evolution within 10 business days of the decision to proceed to Stage 2.
Andromeda said Evolution’s continuation with the joint venture highlights the value of the Drummond project.
“[We believe] the pace at which Evolution has met the Stage 1 commitment and the subsequent election to proceed to Stage 2 underlines the prospectivity of [this project] to host high-grade deposits,” the company said.
The Drummond project comprises four tenements in the Drummond Basin, 90 kilometres south‐east of Charters Towers in northern Queensland.
The area is considered prospective for high-grade epithermal gold deposits such as the Pajingo mine which has produced approximately 3 million ounces of gold and was previously owned and operated by Evolution until its $52m divestment to Minjar Gold Pty Ltd in 2016.
Stage 1 of the agreement saw Evolution conduct an extensive diamond drilling program to test the Bunyip and South West Limey Dam prospects, with the best intercept provided to Andromeda so far being from Bunyip.
That intercept was recorded as being 3 metres at 3.42 grams per tonne gold and 6.7g/t silver from 7m, including 1m at 9.16g/t gold and 18.1g/t silver from 9m.
Final assay results are still being processed.
Other exploration work under Stage 1 included induced polarisation (IP) and magnetic surveys and further soil geochemistry sampling at both prospects.
Regional soil geochemistry and a desktop review of numerous other targets across the Drummond tenement package has also been carried out.
On electing to proceed to Stage 2, Evolution was required to make a cash payment to Andromeda which will be used to advance the flagship Poochera project in South Australia.
Poochera is a joint venture with Minotaur Exploration (ASX: MEP) and contains the high-quality Carey’s Well halloysite-kaolin deposit.
In July, Andromeda signed a string of non-binding offtake deals with Chinese end-users for the project’s dry-processed halloysite-kaolin product.
A scoping study for Poochera’s development is expected to be released before month end.
At midday, shares in Andromeda Metals were up 9.09% to $0.048, while shares in Evolution Mining were up 0.64% to $4.710.