A massive building block: Gold producer Ora Banda inks $45m lithium JV with Wesfarmers, leaps 20pc
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Gold miner Ora Banda has inked a $45m lithium farm in JV with ASX-listed behemoth Wesfarmers subsidiary Brenahan Exploration, who will pay for all exploration across the Davyhurst tenement package from pre-discovery through to completion of a DFS.
Ora Banda (ASX:OBM) is a gold miner with a goal to reach 100,00ozpa from its 1,200km2 Davyhurst tenements, 100km northwest of Kalgoorlie, which boasts a current resource base of 1.8Moz at an average grade of 2.6 g/t gold.
Gold is the main focus, but a three-hole exploration program at the Federal Flag prospect in April intersected over 11m of spodumene at 1.28% Li2O, only 10km south of the Davyhurst processing plant.
The fact the explorer intersected high-grade spodumene in the first hole targeting lithium prospectivity is both a testament to the work completed by the geology team and the potential of the entire tenement package.
Another five areas – Barney, Waihi, Young Australian, Gila, and Siberia – have also been identified to host lithium bearing LCT pegmatite swarms of which Barney and Waihi prospects are highest priority for immediate follow-up based on current data.
The Davyhurst tenement package is very large and has never had any sustained or modern exploration program given its disjointed and undercapitalised historical ownership.
A binding 65/35% joint venture and farm-in agreement with Brenahan Exploration (BEPL) – part of the Wesfarmers Chemicals, Energy and Fertilisers division (WesCF) – will see a strategic partner with the technical expertise and capability unlock the belt for minerals that are non-core to Ora Banda.
“The WesCEF team that will work on this tenement package has a track record of success as they discovered and are helping deliver the Mt Holland lithium project,” OBM managing director Luke Creagh said.
“Although we have had encouraging early-stage lithium results, Ora Banda is a gold focused company and given the underexplored nature and size of this belt, we expect it would take many years to do it justice for other minerals.
“In total, we view this as a $45 million dollar deal with $30 million in cash and $15 million in exploration expenditure.”
The deal structure is aligned to maximise the potential of multiple discoveries to the benefit of both parties, whilst providing balance sheet strength to Ora Banda to further grow gold production.
To increase the total consideration to $30 million, Ora Banda has agreed to effectively on sell 1.5% of the 2% royalty to be received from BEPL to Hawke’s Point Holdings L.P for $4 million, subject to shareholder approval.
BEPL has the ability to increase its stake to 80% by sole funding an additional $15 million of exploration expenditure on the Tenements over the next 3 years.
The BEPL transaction is subject to conditions precedent and is anticipated to complete in the first quarter of 2024.
Ora Banda is free carried from any discovery to the completion of a Definitive Feasibility Study (DFS) – the most advanced of all economic studies – over the area applicable to that DFS.
Areas that are outside any DFS area will remain in the exploration JV, with exploration solely funded by BEPL up to any further completed DFS.
Upon completion of each DFS, BEPL has the option to acquire Ora Banda’s remaining JV interest in the DFS area only.
Importantly, Ora Banda retains all rights to gold minerals over the entire OBM tenement package and maintains exclusive access over current and planned gold mining areas.
This article was developed in collaboration with Ora Banda Mining, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.