Newcrest to fund broad gold exploration in Western Australia
Australia’s largest gold producer, Newcrest Mining (ASX: NCM), has committed to sole fund all of the 2019 exploration programs with junior Encounter Resources (ASX: ENR), covering the highly sought after gold regions of Tanami and West Arunta in Western Australia.
Newcrest, which has five joint ventures (JVs) with Encounter in the area, covering a total of 5,900 km2, will have the right to increase its interest in each JV to 80% should the Sydney-based partner not elect to contribute on a 50:50 basis by sole funding exploration and delivering over one million ounces of gold.
The hunt is on for the next game-changing gold discovery in Australia
Encounter's managing director, Will Robinson, said the exploration boost provided by Newcrest would test several well-defined, advanced targets this.
“The hunt is on for the next game-changing gold discovery in Australia,” he said in a statement.
The junior's shares jumped on the news, trading more than 17% higher on Friday morning to .94 Australian cents. They had closed at .80 cents in Sydney on Thursday.
Newcrest, which is also the world’s No. 3 gold producer by market value, has been aggressively searching for juniors with appealing assets to jointly develop them.
Last month, it announced it was buying a 70% stake in the Red Chris copper and gold mine in Canada from Imperial Metals (TSX: III) for $806.5 million.
The very next day, it set up a joint venture with Greatland Gold (LON:GGP) to advance the explorer’s Havieron project in Western Australia's Paterson region.
The deal has been inked as part of a wave of consolidation in the gold industry, with the largest producers seeking to increase the quality of their portfolios, boosting reserves of the precious metal or winning operational savings.
The Paterson region has attracted major miners as of late, including Rio Tinto (ASX, LON:RIO). The world’s second largest mining company is very invested in the region, and its recent application for nearly 30 exploration licenses has sparked a stampede into adjacent lots by other explorers, who see the miner's aggressive activity as an indicator of a highly promising find.