Sanatana Resources Inc (CVE:STA) announced it had struck an agreement with ArcWest Exploration Ltd (CVE:AWX) to option up to 80% of the Oweegee Dome porphyry copper-gold project in the Golden Triangle region in British Columbia.
Oweegee Dome is located around 45 kilometres east of the massive KSM-Iron Cap porphyry copper-gold project in the highly prospective Golden Triangle.
The 31,077-hectare project contains two large underexplored porphyry copper-gold systems that Sanatana believes host a very similar geological footprint to the flagship Red Chris operation in BC owned by Newcrest Mining and Imperial Metals.
READ: Sanatana Resources reports promising results from first pass scout drill program on the Gold Rush project in Ontario
Under the terms of the first option portion of the agreement, Sanatana can earn an initial 60% interest in the project by funding $6.6 million worth of exploration expenses over a four-year period and making staged payments totaling $500,000 in cash and two million in shares.
Upon completion of the first option and receipt of the initial interest notice from Sanatana, the company will have a 60-day period to elect to earn an additional 20% interest, for an aggregate 80% interest or form a joint venture with ArcWest. The second option can also be attained by delivering a feasibility study on the project by the end of 2027.
Sanatana will pay ArcWest $150,000 on each anniversary of the delivery of the initial interest notice until the feasibility study is complete.
Following the exercise or lapse of the second option, Sanatana and ArcWest will formalize a joint venture to hold and operate the properties that each company will proportionately fund or dilute. If a production decision gets the green light, Sanatana will arrange project financing for the JV, the repayment of which shall be made out of cash flows from the property.
If Sanatana or ArcWest's interest is diluted to less than 10%, the interest will convert to a 2% net smelter return royalty, 1% of which may be purchased by the other party for $5 million at any time.
Exploration set to begin shortly
"Sanatana welcomes the opportunity to partner with ArcWest to explore the Oweegee Dome project, which is host to one of the largest underexplored porphyry copper-gold systems in BC's Golden Triangle,” CEO Peter Miles said in a statement.
Miles noted that Sanatana's chairman, Ian Smith and his team at bcMetals Corp engineered the Red Chris porphyry copper-gold deposit for development, prior to it being acquired by Imperial Metals Corp. Newcrest Mining subsequently purchased 70% of the flagship project from Imperial in a US $804 million deal.
"Sanatana is well funded and we look forward to working with the ArcWest team and expect to begin exploration shortly,” Miles added.
The 2021 exploration program at Oweegee Dome will include geological mapping, geochemical sampling, geophysics, and a first phase diamond drilling program.
Contact Angela at angela@proactiveinvestors.com
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