Newmont to invest $53M in Goldstrike

Ted Liu

Goldstrike Resources Ltd. (TSX-V: GSR; OTCPK: APRAF; FSE: KCG1) has entered into an investment and strategic alliance agreement with Newmont Mining Corporation and its subsidiary, Newmont Canada FN Holdings ULC for investment of CDN $53 million.

Pursuant to a phase 1 agreement, Newmont will acquire 12,705,715 units of Goldstrike by way of non-brokered private placement at CDN $0.4742 per unit for an investment of $6.025 million or US $4.5 million. Goldstrike has agreed to grant to Newmont the right to earn a 51% interest in Goldstrike’s Plateau project in Yukon, by 1) making CDN $8 million or US $6 million cash payments to Goldstrike with US $1 million payable on closing and an additional US $1 million by December 15,2017 mandatory); 2) incurring a minimum of US $13 million in exploration expenditures on Plateau; and 3) completing an NI 43-101 Resource Estimate. Newmont’s firm commitments over the first two years of Phase 1, including the financing, cash payments and exploration expenditures, total CDN $14,658,450.

If Newmont elects to proceed with Phase 2, it must incur a minimum of an additional US $16 million in exploration expenditures and complete a feasibility study by December 15, 2027 to earn an additional 24%. If it does not complete Phase 1 or Phase 2, its interest will revert to 49%. Newmont’s total investment to complete Phases 1 and 2, including the financing, cash payments and exploration expenditures, will be a minimum of CDN $53 million or US $38.5 million.

After completion of Phase 2, Newmont must fund all expenditures on Plateau, including ongoing drilling and other exploration, and environmental compliance, until it delivers a program and budget for the development of the first mine or mines on the property, and, if Goldstrike then exercises its Financing Option, Newmont must fund 100% of all costs relating to the Plateau project for the duration of the Venture, including all mine development costs, with Goldstrike’s share of such costs to be repaid from 80% of Goldstrike’s share of project cash flow.

The Plateau property is a newly discovered district scale gold system consisting of more than 2000 claims covering some 350 square kilometers that have produced excellent initial drill results and widespread high grade gold mineralization found over 50 km that remains open, is largely unexplored and has many of the early indicators of an emerging gold camp in the making.

The Investment agreement also contemplates the possibility of a spin-off of GoldStriek’s Lucky Strike and BRC projects into a separate company.

photo credit: T.J. Bremner, P.Geo. via Goldstrike