Newmont farms-in to Prodigy’s Tobruk gold project in Northern Territory

Newmont Goldcorp Prodigy Gold ASX PRX Tobruk
Newmont will earn up to 70% of Prodigy’s Tobruk gold project under a $14.5 million joint venture.

Prodigy Gold’s (ASX: PRX) Tobruk project in the Northern Territory will be subjected to an extensive exploration campaign under a new $14.5 million joint venture with Newmont Goldcorp’s wholly-owned subsidiary.

According to Prodigy, Tobruk is in an analogous structural setting to Newmont’s nearby 14.2 million ounce Callie gold mine.

Under the farm-in agreement, Newmont will pay a total of $2.5 million in cash via two phases to Prodigy and spend an additional $12 million on exploration at the project to earn a 70% stake.

“We are very pleased to be partnering with the world’s largest gold miner to fast-track the exploration of our Tobruk project in the Tanami Province, a region which is considered the exploration destination of choice for several major gold producers,” Prodigy managing director Matt Briggs said.

“Newmont has a long and successful history in the Tanami area, including developing the nearby Callie gold mine into a world class gold deposit and we are looking forward to leveraging Newmont’s extensive technical knowledge as work gets underway at Tobruk this quarter,” Mr Briggs added.

Newmont’s earn-in has two phases and the company will pay Prodigy $1.5 million within 20 days of signing the agreement. Newmont can then earn 51% by spending $6 million on exploration over four years. However, if it deems necessary, Newmont can withdraw from the joint venture after spending a minimum of $2.5 million on exploration.

If Newmont elects to proceed to phase two exploration to secure its 70% stake, it will make a further $1 million cash payment to Prodigy and spend another $6 million on exploration over three years.

Newmont plans to kick-off exploration during the current quarter, which will include geochemistry and geophysics surveys, followed by diamond drilling which is pencilled in for later in the year.

Newcrest Mining and Independence Group

The earn-in agreement with Newmont follows farm-in contracts with other gold operators.

In July last year, Newcrest Mining agreed to spend $12 million on exploration at Prodigy’s Euro project, which covers 3,478 square kilometres of exploration licences in the NT.

Under the agreement, Newcrest can earn a 75% interest in the asset.

Meanwhile, Independence Group and Prodigy have a joint venture over Lake Mackay gold and copper, with Independence Group undertaking exploration at the project since 2015.

Diamond drilling at the Grapple deposit unearthed 11m at 7.9 grams per tonne gold, 20.7g/t silver, 0.8% copper, 0.5 lead, 1.1% zinc and 0.1% cobalt.

Independence Group completed its $6 million farm-in to the project in 2018 and exploration is currently funded by both Independence Group (70%) and Prodigy 30%).

“Prodigy now has in excess of $33 million in funding agreements from joint venture partners to accelerate discovery across the company’s entire exploration portfolio, including joint ventures with Independence Group and Newcrest that have already generated high-quality targets, which are currently being drilled,” Mr Briggs said.

Lorna has more than 10 years' experience as a finance journalist and editor. She has written for numerous industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has also covered a myriad of small and large cap ASX and dual-listed stocks.