- 01Red Hill can earn 75% of Thomson for up to $6m.
- 02Initial $2m includes 1,500m of diamond drilling.
- 03Deal strengthens its 1.5% NSR over two tenements.
Red Hill Minerals (ASX: RHI) has agreed to fund up to $6 million of exploration at the Thomson gold-copper project in New South Wales under a two-stage arrangement with project owner Legacy Minerals (ASX: LGM).
The agreement gives Red Hill the opportunity to earn a 75% project interest after an initial $2m exploration commitment that will also strengthen its existing royalty position.
Its first-stage program will include at least 1,500 metres of diamond drilling across two or more targets within 12 months of the relevant conditions being satisfied.
The transaction adds a potential direct exploration interest to Red Hill’s existing 1.5% net smelter royalty (NSR) over two Thomson tenements, which Legacy currently has the right to repurchase.
Exploration Commitments and Royalty Terms
Red Hill will initially sole-fund and manage $2m of in-ground work on exploration licences EL9190 and EL9194, with provision to settle any spending shortfall in cash after completing the minimum drilling.
Completing that stage extinguishes Legacy’s right to buy back the NSR for $6m and leaves Red Hill holding the uncapped royalty, while failure to complete preserves the buyback right.
Red Hill can then elect within 30 days to spend another $4m across the three-tenement Thomson project over a maximum of 48 months to earn its 75% stake.
The second stage requires at least $2m of expenditure and another 1,500m of diamond drilling within its first 24 months before Red Hill can withdraw.
If the earn-in is completed, Red Hill will initially manage a joint venture with its 75% interest and Legacy’s remaining 25%, subject to the agreed royalty and dilution provisions.
Large Targets Beneath Basin Cover
Thomson covers approximately 5,400 square kilometres west of Bourke, where magnetic and gravity surveys have identified several coincident bullseye anomalies interpreted as possible intrusion-related gold and copper systems.
Cover rocks approximately 80m to 280m thick obscure the prospective basement, although several targets already have drilling approvals and remain untested.
Historical drilling at Cut-A intersected 377m grading 0.1 grams per tonne gold from 225m without a cut-off grade, including 11m at 0.8g/t from 287m.
Diamond drilling at Cut-B and F4 in 2025 encountered extensive alteration and quartz-sulphide veining, providing further geological context for Red Hill’s planned targeting.
Before the first program begins, the parties must address due diligence, land access arrangements, and a royalty deed amendment, with a formal agreement targeted within 30 days of signing.
Pannawonica Arrow Option
The Thomson agreement follows Red Hill granting Arrow Minerals (ASX: AMD) an exclusive 12-month option to acquire its Pannawonica iron project in Western Australia, a seven-tenement project that contains a reported mineral resource of 62.5 million tonnes at 53.4% iron.
Arrow will provide a $150,000 option fee in shares and, if it exercises the option, pay $1m in cash or shares while granting Red Hill an uncapped 1.5% gross revenue royalty (GRR) over future project iron ore sales.
A further uncapped 0.25% GRR would apply to qualifying iron ore production from certain deposits in the surrounding area of influence, while Arrow will meet holding costs during its assessment period.
“The proposed divestment is consistent with Red Hill's strategy of actively managing its asset portfolio to maximise shareholder value by creating and acquiring royalties,” executive chair Joshua Pitt said.
Mr Pitt added that the transaction would “provide Red Hill with upfront consideration while retaining a long-term royalty interest in the Pannawonica project and surrounding tenements […] if the option is exercised”.
Get the wire before the market opens.
The ASX small-cap stories that matter, filed before 9am AEST. Curated by the Small Caps desk.