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- Mining company Sandfire Resources (SFR) has entered a farm-in agreement with CBH Resources
- The agreement gives Sandfire the right to earn up to 100 per cent interest in the Endeavour base metal mine
- This will extend to the highly prospective tenement package which surrounds Endeavour in New South Wales’ Cobar Basin
- In order to acquire full interest in the package, Sandfire will need to pay CBH approximately $30 million
- Sandfire Resources is down a slight 0.58 per cent in early trade, with shares priced at $4.26
Sandfire Resources (SFR) has entered a farm-in agreement with CBH Resources.
The agreement relates to the Endeavour base metal mine and surrounding exploration tenements, located near New South Wales’ Cobar Basin. The farm-in arrangement gives Sandfire the right to earn up to 100 per cent interest in the Endeavour mine and surrounding tenements.
In addition to the mine and surrounding tenements, the package also includes infrastructure and a 1.2 million tonnes-per-annum processing plant. The Endeavour mine is currently on care and maintenance.
Stage one of the farm-in agreement provides the company with an initial minimum expenditure commitment of $3 million within 18 months.
This will allow Sandfire to conduct exploration works and evaluate the tenements without any obligation to continue or be responsible/liable for care and maintenance or rehabilitation costs.
If the company chooses to spend an additional $7 million, it can enter the agreement’s second stage. Stage two gives Sandfire the option to enter a joint venture and earn a JV interest of 51 per cent in the tenements. During this stage, the company will contribute to costs for care and maintenance.
In order to increase its interest in Endeavour from 51 per cent to 75 per cent, Sandfire would have to spend an additional $10 million. During this third stage, the company will be responsible for at least 75 per cent of the care and maintenance expenses.
In order to acquire 100 per cent interest in the package, Sandfire will need to pay CBH approximately $30 million in total.
Sandfire Resources’ Managing Director and CEO, Karl Simich, commented on the benefits of the company’s agreement with CBH Resources.
“The farm-in arrangement with CBH Resources provides Sandfire with a low-cost entry to an advanced exploration opportunity in one of the world’s most prolific base metal belts in NSW,” he said.
Sandfire Resources is down a slight 0.58 per cent in early trade, with shares priced at $4.26 at 10:36 am AEDT.
