King & Wood Mallesons (KWM) has advised St Barbara Limited (St Barbara) on its farm-in and joint venture arrangement with Kite Operations Pty Ltd (Kite) (a subsidiary of ASX-listed Catalyst Metals Limited (Catalyst)), that will see St Barbara manage exploration for the Drummartin gold project in Victoria.
Under the arrangement, St Barbara may acquire a 50% participating interest in the Drummartin exploration project by contributing exploration funding to the value of $3.5 million in the first four years.
St Barbara will act as manager of the project during both the earn-in and joint venture period (for so long as it holds a 50% interest), and Kite will be the 'on ground' operator of the project. St Barbara's substantial shareholding in Catalyst means that the earn-in and joint venture agreement between the parties is conditional on Catalyst shareholder approval, which must be received within 90 days of the agreement being signed. For further details, see Catalyst's announcement here.
The KWM team advising on the deal was led by partner, Scott Langford. Scott was principally supported by KWM M&A corporate partner Will Heath, and solicitors Lachlan Fahey, Luci Kjar-Cruttenden and Jeremy Hart.
Commenting on the transaction, Scott said: "We are delighted to have assisted St Barbara to increase its Australian exploration portfolio in line with its strategy to grow through discovery and generate highly prospective targets."
This is the second completed gold exploration earn-in and joint venture arrangement on which KWM has advised St Barbara this year. In the first half of CY 2019, KWM acted for St Barbara on the Horn Island earn-in and joint venture arrangement with Alice Queen Limited (see announcement here). Under that arrangement, St Barbara can acquire a 70% interest in the highly prospective Horn Island tenement, by undertaking $4 million in exploration works over three years. Horn Island is located in the Torres Strait islands archipelago in Northern Queensland.
The Drummartin project is about 60 kilometres north of the Fosterville Gold Mine (owned by Toronto-based Kirkland Lake Gold), within the prospective northern goldfields region in Victoria. This deal comes off the back of a recent resurgence in the Victorian gold industry, with the previously-mentioned Fosterville Gold Mine, Ballarat Goldfield and Costerfield mine producing in excess of 340,000 ounces of gold in the 2017-18 financial year. In addition, the Stawell Gold Mine was reopened in 2017, and in January 2019 produced its first gold bar since closing in December 2016. On 29 October this year, the Victorian Government released 4 blocks of prospective ground, in the North Central Goldfields region (close to the Drummartin tenement), to a competitive tender process. Submissions for exploration licences are due by 31 January 2020. The Geological Survey of Victoria estimates there may be up to 75 million ounces of gold yet to be discovered in northern Victoria, and it is likely that there will be considerable interest in the release blocks.'