Gold explorer Gateway Mining (ASX: GML) has entered into a strategic farm-in agreement with Golden Mile Resources (ASX: G88) which will significantly increase the footprint of its Gidgee gold project in WA.
The three-stage agreement will enable Gateway to take control of an under-explored, highly-prospective, 30 kilometre structural corridor known as the Woodley Domain to complement the existing project while increasing its landholding to over 1,000sq km.
Under the terms, Gateway will qualify for a total 80% equity in the Woodley Domain tenements by committing to an initial 12-month non-withdrawal period with Golden Mile, during which it will spend a minimum $210,000 on exploration.
A further $420,000 must be spent within three years of the agreement date to earn a 51% equity, followed by a $500,000 spend within five years to lock-in a further 29%.
Golden Mile’s interest in the tenements will be free-carried to a decision to mine, at which point the company can elect to contribute to the project or dilute to a 0.5% net smelter return.
Gateway’s farm-in of Gidgee will reduce Golden Mile’s expenditure commitments on what Golden Mile considers to be “non-core assets”, thereby enabling it to focus on its priority Leonora East and Yuinmery projects.
Gateway managing director Peter Langworthy said the farm-in was in keeping with the company’s exploration strategy.
“This deal is consistent with our strategy of accumulating significant landholdings proximal to the core Montague tenements at Gidgee, through low-cost entry means,” he said.
“A sensible, staged approach to this farm-in will allow us to significantly de-risk this project over time without committing to significant amounts of capital upfront.”
Third major trend
Woodley is the third major gold trend identified within the Gum Creek Greenstone Belt, following the Eastern Montague Domain with an endowment of more than 1 million ounces and the Central Gidgee Domain with more than 2Moz.
It is relatively small by comparison, with the endowment size reflecting a lack of systematic historical work by companies including Gateway, which explored there for 10 years from 1996.
Several geochemical gold anomalies throughout the domain were followed up with rudimentary drilling which made shallow intercepts including 40m at 3 grams per tonne gold from surface, 20m at 2.5g/t gold from surface, and 11m at 4.5g/t gold from 58m.
The intercepts remain largely open and Gateway said would leverage off its understanding of the geology and controls on mineralisation within the belt to follow up on the historical results.
The farm-in deal represents a “compelling opportunity” for Gateway to expand its already-strong position within the Gum Creek Greenstone belt.
“This new ground package adjoins our existing tenure and will increase our total landholding within one of the world’s premier gold exploration jurisdictions,” Mr Langworthy said.
“Importantly, this means we can now explore two major gold-bearing structural corridors, applying the knowledge we have gained from the Montague Domain to the new Woodley Domain.”
Mr Langworthy said the initial analysis of Woodley was positive.
“We believe it is just as prospective as the other two established domains in the belt, with the same rock sequence and greenstone scale structural control.”
“While historical exploration has been limited and inconsistent, there are a number of exciting drill intercepts in the database that warrant immediate investigation, including a standout intercept of 40m at 3g/t gold from surface.”