Great Western Mining (GWMO ) has announced that it is party to an option agreement with KGHM in respect of the pooled Eastside-Tango copper porphyry project in Nevada.

Great Western holds a 30% participating interest in Eastside.

Under the terms of the option agreement, KGHM may earn up to a 100% interest in Eastside through staged payments, and a minimum exploration commitment of US$5 million during a six-year option period

An execution payment and annual option payments over the six-year option period will total US$650,000, of which an aggregate US$195,000 will be net to Great Western.

The current owners will also retain a 2% net smelter royalty retained,  of which 0.6% is net to Great Western.

Further advance payments will linked to certain milestones, including the declaration of a resource, preliminary economic analysis and feasibility study. Of these further payments, US$675,000 will be net to Great Western in aggregate.

"The option agreement with KGHM is a clear endorsement of the Eastside-Tango asset and of our project generation strategy, supporting disciplined capital allocation while preserving upside,” said Great Western’s chairman Brian Hall.

“Securing an agreement with a globally established copper producer validates the prospectivity of the wider district and highlights the potential value of the copper opportunity at our nearby Huntoon copper project. This transaction delivers immediate value, while retaining long-term royalty exposure and transferring future funding of the asset to a well-capitalised operator.”

 

View from Vox

 

This is a useful-looking deal on several levels. Firstly, with tungsten prices hitting record highs it’s hardly surprising that Great Western is focussing much of its energy on moving ahead with its own promising-looking tungsten project at Defender-Pine Crow. But that doesn’t mean that the rest of its ground is any less prospective, as KGHM has come to appreciate. We’re talking about Europe’s largest copper producer here, and although it may be slow moving, once it signs on the dotted line, its participation should be seen as highly significant. Eastside shows potential for a copper porphyry, or copper porphyry system. It’s that that KGHM will be shooting for, and if it finds something Great Western will still retain some interest via its royalty stake.