- Dreadnought Resources (DRE) has struck an earn-in option deal with Canada-based First Quantum Minerals (FQM) over a core WA mining project
- Under the terms of the deal, First Quantum will need to fund at least $15 million in exploration work over the next five years to earn a 51 per cent interest in the Mangaroon project
- Once this majority interest has been earned, First Quantum can then keep funding work on the project to bolster this interest to 70 per cent
- Dreadnought will manage exploration through the option phase while FQM funds the work
- Importantly, Dreadnought retains the rights to any potential major gold discovery at Mangaroon
- The Mangaroon project is made up of five tenements prospective for nickel, copper, platinum group elements (PGE) and gold
- Shares in Dreadnought are trading over 10 per cent higher this morning to 2.1 cents each
Junior explorer Dreadnought Resources (DRE) has struck an earn-in option deal with Canada-based First Quantum Minerals (FQM) over a core WA mining project.
Under the $15 million deal, First Quantum has the option to earn a 51 per cent interest in Dreadnought’s Mangaroon project in WA’s Gascoyne Region. The project is made up of five tenements prospective for nickel, copper, platinum group elements (PGE) and gold.
FQM will first take on a small exploration project at Mangaroon before deciding whether or not to commit to earning its majority interest by funding major exploration work across the WA tenements over the next five years.
Dreadnought Managing Director Dean Tuck said the company is excited to be managing the early stages of exploration and working with FQM on the project.
“Finding a partner for Mangaroon is a significant validation of our project generation work and the potential to host high tenor massive sulphides,” Dean said.
“Furthermore, it allows Dreadnought shareholders a potential free carried pathway from exploration to development of a mine,” he said.
He added that Dreadnought retains the rights to any potential major gold discovery at Mangaroon.
Joint venture on the horizon
Under the terms of today’s deal, First Quantum has committed to a $700,000 target definition program at the WA project, after which it must decide to commit to the project or leave empty-handed.
If it decides to commit, FQM can then spend another $2.3 million on exploration work to earn the right to enter a staged earn-in and joint venture (JV) deal over Mangaroon.
Under this earn-in phase of the deal, FQM will need to fund another $12 million of work at the project by March 1, 2026, to earn its 51-per-cent interest in Mangaroon.
FQM can pull out of the deal at any time during this earn-in process, but if it does, it will leave with no interest in the project.
Nevertheless, this majority interest is still contingent on other conditions laid out in today’s deal.
Upon meeting its earn-in requirements, FQM can continue funding exploration through to a decision to mine to increase its interest in the project to 70 per cent. If, however, FQM decides to stop funding exploration at this point, its interest with revert to 49 per cent, with Dreadnought still owning the rest.
In the event FQM continues to fund exploration and a decision to mine has been made, Dreadnought then has three options: it can either maintain its 30 per cent interest and co-contribute to the work from there on out, dilute its interest to 20 per cent and be loan-carried by FQM, or sell its 30 per cent interest to FQM at a fair market value.
In any case, Dreadnought will manage exploration through the option phase while FQM funds the work.
Importantly, Dreadnought will retain rights to any major gold discoveries in the Mangaroon area unveiled through this major exploration program, so long as the defined JORC resource contains more than 75 per cent of the metal value as gold.
Shares in Dreadnought are trading 10.53 per cent higher at 10:13 am AEDT to 2.1 cents each. The company has a $45 million market cap.