Shares in Greatland Gold PLC (LON:GGP) soared on Tuesday after it signed a deal with giant Newmont Mining Corp (NYSE:NEM), which it said could “accelerate the realisation of the potential value” of the Ernest Giles Project in Western Australia.
The New York-listed group has been granted exclusive access to the tenements and exploration database for six months and has the right of first refusal should the Greatland opt to sell or joint venture the asset in that period.
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Newmont will use certain “proprietary exploration methods” to unlock the potential of Ernest Giles, which covers 1,800-square kilometres of virtually unexplored greenstone belt and is host to a number of potential targets.
There are two large zones of mineralisation to the west and east of the area – 6 kilometres by 1.5 kilometres and 2 kilometres by 1.5 kilometres respectively.
Drilling returns encouraging results
A number of reverse circulation holes have been drilled that have intercepted gold of grades between 1.51 grams per tonne to 2 grams.
The shallowest intercept was at 119 metres, suggesting that Ernest Giles represents could eventually turn out to be a large, relatively near surface deposit.
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Of Tuesday’s news, chief executive Gervaise Heddle said: "We are delighted to have entered into this agreement with Newmont which we hope will significantly accelerate the realisation of the potential value of this exciting gold project.
“This agreement represents a major step forward for the Company and reinforces our view that the Ernest Giles project has the potential to host several multi-million ounce gold camps.
"We look forward to working with Newmont's Australian-based team who will be able to bring their extensive collective skills and experience in gold exploration, as well as their industry leading proprietary exploration techniques, and apply them to the vast and virtually unexplored Ernest Giles greenstone belt that is 100% controlled by Greatland.”
Scale of potential piqued Newmont's interest
“Although the terms of the Newmont deal have not been disclosed, the scale of the potential, in an area where there have already been multi-million ounce gold discoveries appears to have piqued the interest of Newmont," said City mining broker SP Angel.
“The project appears to be at a relatively early stage of exploration and no doubt a company of Newmont’s stature will screen a large number of offers until it identifies a project it wishes to advance.
“We look forward to further news indicating whether or not, after the initial period of exploration access, the Ernest Giles project meets Newmont’s criteria.”
Shortly before market close, shares were up 23%, or 0.07p, to 0.39p.
-- Adds share price and broker comment --