Sandfire Resources (ASX: SFR) has finalised a deal with Havilah Resources (ASX: HAV) to jointly advance Havilah’s Kalkaroo copper-gold project in South Australia and establish an exploration alliance across the highly prospective Curnamona Province.
Sandfire will earn an 80% interest in Kalkaroo for an upfront consideration of $105 million (70% scrip and 30% cash), plus a second equivalent payment on completion of a new pre-feasibility study (PFS) comprising a minimum of 20,000 metres drilling.
The infill and extension campaign will aim to increase confidence in Kalkaroo’s mineral resource and reserves and test extensions to these zones.
Right of First Refusal
Havilah will retain a 20% free carried interest in the project through to final investment decision, after which Sandfire will be responsible for arranging project development financing.
Sandfire will in turn retain a right of first refusal over Havilah’s 20% interest in Kalkaroo, along with the Kalkaroo pastoral lease on which the project sits.
The new agreement establishes a rapid pathway to unlocking one of Australia’s largest undeveloped open pit copper-gold deposits.
It also offers Sandfire the chance to expand Kalkaroo’s existing ore reserve of 100 million tonnes (90% proved) at 0.47% copper and 0.44 grams per tonne gold, which is underpinned by a sulphide mineral resource of 224Mt at 0.49% copper and 0.36g/t gold.
The new PFS – which the parties expect will help de-risk the project by testing the open extent of the orebody along strike and at depth – is due for completion within 24 months of the agreement.
Major Regional Copper Hub
The Sandfire-Havilah exploration alliance will look to capitalise on regional upside potential by targeting new discoveries within Havilah’s large prospective tenement package across the Curnomona Province, with the aim of creating Australia’s next major copper hub.
The partnership combines Sandfire’s proven expertise in mine design, project development, and operations with Havilah’s deep geological knowledge of the region and track record of discoveries including Kalkaroo and Mutooroo.
Sandfire will commit $30m to regional exploration over a minimum 24-month period and could additionally earn 80% equity in new discoveries within a defined area by funding additional drilling through to a maiden resource.
Mutually Beneficial Deal
“We are thrilled to have the opportunity to work with Havilah to de-risk this important project, which is in a preferred jurisdiction with ready access to key road, rail and energy infrastructure and ground water supply, as well as skilled labour from Adelaide, Broken Hill and the broader regional community,” Sandfire chief executive officer Brendan Harris said.
“The decision to move into the Curnamona Province is fully aligned with our strategy and has the potential to replicate our successful 2019 entry into the Kalahari copper belt in Botswana.”
“We are very pleased to have reached a binding agreement with Sandfire that provides for completion of a new Kalkaroo PFS, including a substantial drilling program targeting resource upgrade and expansion,” Havilah technical director Dr Chris Giles added.
“Our shareholders will receive immediate value via an upfront payment and share issue which will also gives us a direct stake in Sandfire’s successful global mining operations.”
