Nagambie Resources has signed a binding term sheet with Alkane Resources for a proposed joint venture covering the Nagambie mine and nearby exploration ground in Victoria.

Under the proposed deal, Alkane would be able to earn up to an 80 per cent interest in the project by spending up to $27.5 million on exploration and development. Alternatively, Alkane could earn a 60 per cent interest by funding $12.5 million.

Once the earn-in is completed, the companies would form an unincorporated joint venture, with Alkane managing the project.

As part of the agreement, Alkane will invest $2.5 million in Nagambie Resources by subscribing for new shares at 1.5 cents per share, which is a 50 per cent premium to the company’s last traded share price.

The joint venture would focus on exploration drilling and potential mine development at the Nagambie mine. If successful, ore could be trucked to Alkane’s nearby Costerfield processing plant for treatment, using existing gravity gold and antimony-gold flotation circuits.

Nagambie Resources will retain full ownership of its Whroo mines gold-antimony project and Wandean gold-antimony project, which are not included in the proposed joint venture.

Nagambie chair Kevin Perrin said the two companies see strong potential in combining Nagambie’s antimony-gold discovery with Alkane’s nearby mining and processing operations, noting the close proximity of the projects.

“We have long considered that the obvious synergies between our high-grade antimony-gold discovery at the Nagambie mine and Alkane’s Costerfield mine operations could lead to a win-win joint venture for both parties,” Perrin said.

“Separated by only 40 km of good bitumen road, [and] being able to access the existing Costerfield operations expands the potential resources that can be processed at the Costerfield treatment plant and provides an opportunity to extend or expand the Costerfield operations.”

The proposed joint venture is subject to conditions including due diligence and approval from Nagambie shareholders.

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