Alloy Resources (ASX:AYR) will trade higher today after securing a $4 million farm-in from Doray Minerals (ASX:DRM) to explore the Horse Well Gold Project in the north-eastern goldfields of Western Australia.
Doray is a gold mining company with the high grade, low cost Andy Well gold mining operation that commenced production in August 2013.
Exploration activity for the next 12 months now fully funded by a partner with a track record of successfully developing gold operations.
Northern Star’s recent acquisition of the 5 million ounce Jundee gold deposit 40 kilometres to the south has brought renewed focus to Yandal gold province, further reiterated by Doray's interest in Alloy.
Alloy controls 950 square kilometres of exploration tenements in the northern part of the Millrose Greenstone belt, which covers 50 strike kilometres of the belt.
A Mineral Resource of 100,000 ounces of gold has been established and over the last two years exploration has extended the prospectivity for new gold discoveries along the entire greenstone belt.
Key Terms of the agreement include a $100,000 cash payment to Alloy at commencement; $900,000 non-withdrawal expenditure within the first 12 months, with Doray to earn 60% with a further spend of $1 million within 24 months.
Doray is to manage the JV and may spend a further $2 million within 36 months of commencement to earn 80%.
Alloy at this time can elect to contribute pro rata to this $2 million and continue through to PFS or dilute to 20% using industry standard formula.
This deal unlocks the gold potential at Horse Well which remained latent due to funding restrictions.
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