Newcrest Eyes Paterson Potential With Greatland Gold JV

By Glenn Dyer | More Articles by Glenn Dyer

Newcrest Mining has signalled a commitment to its low-grade Telfer gold mine in the East Pilbara by striking a $90 million exploration farm-in agreement with Greatland Gold in the highly prospective Paterson province where Rio Tinto has made a massive discovery of gold, copper, and silver.

Greatland said yesterday it had struck a deal with Australia’s biggest gold producer to potentially hand over a 70% interest in its Havieron prospect, about 45 kilometres east of Telfer.

Telfer (which was originally owned by BHP Gold) is 130 kilometres to the south of the Rio Tinto area.

Drilling by Greatland has returned deep intersections at Havieron in recent months, including a 275 metre intersection at 4.77 grams per tonne gold and 0.61% copper (the length and grade is similar to some of the intersections reported last month byRioo Tinto at its Winu prospect nearby).

Newcrest will be the manager of the exploration program during the farm-in period and while it maintains a majority interest. There is a minimum commitment of US$5m over an initial 12 month period with the potential for Newcrest to earn up to a 70% joint venture interest throughthe total expenditure of US$65m over a 6 year period.

Newcrest may acquire an additional 5% interest at the end of the farm-in period at fair market value.

During the farm-in period, Newcrest will have a first right of refusal over the remainder of Greatland Gold’s Paterson project (Black Hills, Paterson Range East and portions of the Havieron licence). Newcrest may terminate the farm-in agreement at any time after the minimum commitment has been met.

Ore from Havieron will be toll treated at Telfer if it is a decision to move to a working mine is made.

Telfer has been a marginal proposition for Newcrest, but the Greatland deal highlights its commitment to the asset as well as its existing landholding in the surrounding Paterson province.

Greatland chief executive Gervaise Heddle said the company would benefit from Newcrest’s experience as a developer and producer at Telfer as well as its broader understanding of the geology of the Paterson region.

The agreement covers 12 tenements around Havieron but Greatland has also agreed to grant Newcrest first right of refusal of the remainder of its Paterson project. Newcrest’s Chief Development Officer, Michael Nossal, said “ Greatland Gold’sexploration to date has intersected significant mineralisation only 45km from Telfer’s extensive infrastructure and processing capacity.

“Further exploration at Havieron is in line with our strategy in Australia of looking under-cover and it is becoming more and more evident that the Paterson region is highly prospective for under-cover discoveries. Having existing infrastructure centred in this highly prospective region shows the latent option value embedded at Telfer.”

Newcrest has also expanded its footprint in the prospective Tanami and West Arunta regions in central WA as part of two exploration joint venture deals with minnow Encounter Resources.

The announcements came a day after Newcrest flagged a $1.1 billion deal to take a majority stake in a Canadian copper and gold mine.

Under that deal, Newcrest will run the Red Chris mine in British Columbia. It is estimated to contain 20 million ounces of gold and 13 billion pounds of copper.

Newcrest shares rose 3% yesterday to $25.19 after world gold prices rose on Tuesday.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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