Astro Resources NL (ASX:ARO) has signed a letter of intent (LOI) with Nevada Exploration Inc (NGE) aimed at forming a strategic alliance to generate and advance epithermal gold projects in its million-acre area of interest (AOI) in northern Nevada.
Under the LOI, TSX-V-listed NGE will contribute its exploration data within the AOI and grant Astro a first right to use this data to acquire current and future exploration targets for two years based on a standard earn-in agreement.
Consequently, Astro will commit to spending US$1.4 million on the resulting projects that have the potential to be value accretive to the company.
“Biggest prizes in our industry”
Astro chairman Jacob Khouri said: “Being based in Australia, where our industry has had no choice but to advance new undercover exploration tools to explore in the 80% of the country where the bedrock is covered, our team recognises the incredible opportunities globally for first movers in applying new technology to open up covered search spaces.
“We’re very pleased to partner with Nevada Exploration, a recognised leader in undercover exploration, to employ the same strategies being used in Australia to participate in exploring for what we believe to be one of the biggest prizes in our industry, the second, undercover, half of Nevada’s gold endowment.
“With a 15-year head start, NGE has used the latest exploration technology to build a database of new exploration targets under cover, which we can now use to develop a meaningful portfolio of new projects.
“We have begun our review of NGE’s database and expect to make further announcements soon.”
Strategic alliance
Under the proposed two-year strategic alliance, Astro and NGE plan to work together to leverage NGE’s technology, data and expertise to identify, acquire and advance a portfolio of additional projects in an area of Nevada known for epithermal-style gold deposits, including the 4.8-million ounce Sleeper deposit.
NGE has developed new undercover exploration technology to assist in the discovery of mineralisation in the more than 50% of Nevada where prospective bedrock is hidden beneath its valley basins.
The undercover explorer will provide Astro access to its extensive exploration database covering a million-acre area of interest, together with strong local management.
NGE’s generative program involved aggregating more than 50,000 historic water sampling records, then collecting more than 6,000 new groundwater samples, predominantly from purpose-drilled boreholes, each of which was analysed directly for gold and related pathfinders using the latest laboratory technology.
Based on the results of its state-wide sampling program, NGE has developed a proprietary database of new undercover exploration targets. NGE is presently advancing several Carlin-type gold projects that resulted from this generative program.
Transaction summary
Under the proposed two-year alliance, NGE will grant Astro a first right to acquire exploration targets within the AOI, subject to standard earn-in agreements, on which Astro will commit to spending US$600,000 in Year 1 and $US800,000 in Year 2
Astro will enjoy flexibility in the allocation of its committed US$1.4 million in expenditures across the designated properties, with no minimum expenditures at any given designated property.
Upon Astro estimating a JORC inferred resource exceeding 750,000 ounces at a designated property, Astro and NGE will form a joint-venture limited-liability company to advance the property.
Following the achievement of the resource, both parties will be required to fund their share of the project development costs or their interest will be diluted.
If at any time, either party's interest is diluted below 10%, their interest will automatically be converted to a 2% net smelter return royalty.