Frontier Resources (ASX:FNT) has scored a major coup, signing up Newcrest Mining (ASX:NCM) as both an investor and a potential farm-in partner for its Mt Andewa gold porphyry in New Britain, Papua New Guinea.
Newcrest has agreed to subscribe for A$750,000 in Frontier shares priced at A$0.1067 each and will negotiate terms for the Mt Andewa farm-in.
Funds from the share placement will be used to fund exploration in Frontier’s various tenements.
Meanwhile, the farm-in will involve Newcrest taking a 60% interest in Mt Andewa by spending A$15.25 million over 4 years from the beginning of this year.
Newcrest will have the option to earn a 60% stake in the adjacent Schrader exploration area, once Frontier secures the licence ELA1951 over it, by spending a further A$4 million.
It will also have the option to increase its stake in the project by an additional 12% by paying Frontier a payment of 12% of the ore reserve gold ounces (at US$46 per ounce) specified in any subsequent feasibility study to develop Mt Andewa and/or Schrader.
Newcrest has the option to withdraw from the farm-in after it has spent at least A$2.5 million over about 18 months.
Recent drilling at Mt Andewa has highlighted its potential with diamond drill holes ADH 008 and ADH 009 intersecting gold mineralised intrusive and volcanic lithologies from the surface to the bottom of the holes.
While the gold and copper grades encountered have been modest, the intercept lengths and reflect a very large and pregnant system with excellent prospectivity.
ADH 008 intersected 403.5 metres at 0.27 grams per tonne (g/t) gold and 0.05% copper with higher grade intercepts including 6.4 metres at 2.75g/t gold and 0.08% copper and 1 metre at 2.94g/t gold and 0.46% copper.
ADH 009 intersected 407.9 metres at 0.23g/t gold and 0.06% copper including 58.5 metres at 0.33g/t gold and 0.09% copper, 9.3 metres at 0.72g/t gold and 0.14% copper and 3 metres at 1.15g/t gold and 0.05% copper.