The parties have signed a letter agreement that will see Sandfire spend at least $1.5 million on exploration over 18 months.
Thundelarra will be free-carried through to mining while Sandfire can earn 75% by defining a JORC resource of at least 30,000 tonnes of contained copper or copper equivalent.
Phil Crabb, chairman, commented: “This transaction makes a great deal of sense for all parties.
“It allows Thundelarra to focus all its efforts and cash on continuing exploration at the exciting, wholly-owned Garden Gully gold discovery, while at the same time there will be significant exploration underway at Red Bore at no cost to Thundelarra.”
Red Bore is located on a granted mining licence adjacent to Sandfire’s operating DeGrussa copper-gold mine in the Doolgunna region of Western Australia.
Currently it is held 90% by Thundelarra and 10% by Mr W Richmond and is operated under a joint venture agreement.
It has JORC 2004 indicated and inferred resources totalling 1,740 tonnes copper and 650,000 ounces gold to ~140 metres from surface.
Key agreement terms
The agreement is subject to Thundelarra’s current joint venture partner who holds 10% of Red Bore not exercising his pre-emptive right.
Once this has been agreed, the earn-in agreement will start, which is estimated to be no more than 40 days away.
Key terms of the pending agreement include:
- Sandfire to issue $1.5 million shares to Thundelarra at an issue price equal to Sandfire’s 5-day VWAP;
- Thundelarra to provide all its Red Bore exploration data to Sandfire;
- Sandfire to incur a minimum of $1.5 million in exploration expenditure at Red Bore within 18 months;
- Sandfire may sole fund continued exploration indefinitely;
- Upon the definition of a JORC 2012 resource of at least 30,000 tonnes of contained copper metal and/or copper metal equivalent, Sandfire will have earned 75% equity in Red Bore; and
- Equity interests will then be Sandfire 75%; Thundelarra 15%; W Richmond 10% at which point a joint venture will be formed and Thundelarra will be free carried to mining in terms of cash outlay, with expenditure contributions funded by Sandfire on a non-recourse basis and to be repaid from Thundelarra’s share of cash flow.
This agreement with Sandfire allows for accelerated exploration at Red Bore to advance the project to the next level.
Importantly, Thundelarra has the potential to be free-carried through to mining at Red Bore, allowing it to conserve cash and focus expenditure on Garden Gully.
Sandfire is a well-known ASX company that is responsible for one of Australia’s greatest discoveries and mine developments in DeGrussa.
Thundelarra remains convinced that Red Bore has hidden riches yet to be uncovered, and that Sandfire is the logical party to accelerate exploration.
Sandfire has a unique understanding of the local geology and pathfinders, based on their own development at DeGrussa.
Their Conductor 5 orebody, at circa 600 metres below surface, lies less than 200 metres from the north-west corner of Red Bore.
This could be the key to unlocking Red Bore and delivering value to Thundelarra’s longstanding and loyal shareholders.
Shares are currently trading 17% higher intra-day, currently priced at $0.053.