Newcrest inks $65-million JV deal with Greatland Gold
Australia鈥檚 largest gold producer, Newcrest Mining (ASX: NCM), continued its deal-making spree Tuesday by (LON:GGP), which will focus on advancing the explorer鈥檚 Havieron project in Western Australia’s Paterson region.
The agreement comes only a day after Newcrest announced it was in Canada from Imperial Metals (TSX: III) for $806.5 million.
The Melbourne-based company, which is also the world鈥檚 No. 3 gold producer by market value, will maintain a majority interest in the joint venture. It will also be the manager of the mining program during the so called , with the option to earn up to a 70% stake by spending up to $65 million over a six-year period after an initial investment of $5 million.
Newcrest will have a majority interest in the joint venture and it will also be the manager of the mining program during the so called farm-in period.
Newcrest plans to process any ore from the Havieron site at its Telfer mine, located only 45km west, the company said.
鈥淲e are excited to enter into this partnership, Newcrest鈥檚 chief development officer, Michael Nossal, said in the statement. 鈥淔urther exploration at Havieron is in line with our strategy in Australia of looking under-cover and it is becoming more and more evident that the Paterson region is highly prospective for under-cover discoveries.鈥
Greatland Gold鈥檚 chief executive officer, Gervaise Heddle, said he believed the deal represented a win-win for both parties due to the potential for significantly reduced capital costs and increased efficiency.
鈥淕reatland will receive tremendous benefit from Newcrest’s experience as a developer and producer at Telfer and Newcrest’s broader understanding of the geology of the Paterson region,鈥 Heddle said in a .
The agreement comes amid a wave of consolidation in the gold industry, as the largest producers seek to increase the quality of their portfolios, boost reserves of the precious metal or win operational savings.
The Paterson region hosts several large gold and/or copper deposits such as Nifty, Winu and Newcrest鈥檚 own Telfer. World鈥檚 second largest mining company Rio Tinto (ASX, LON:RIO) is very invested in the area and its has sparked a stampede into adjacent lots by other explorers, who see the miner’s aggressive activity as an indicator of a highly promising find.
Shares in Greatland skyrocketed on the news and were trading 20.6% higher on Tuesday at 2.21p by 1:00 pm London time.
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