Evolution earns major stake in Cue JV with Musgrave ahead of schedule
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Demonstrating Evolution’s confidence in the potential of the Lake Austin portion of Musgrave Minerals’ Cue project in WA, the $6 billion miner has completed its 75% earn in nearly two years ahead of schedule.
It has taken Evolution Mining (ASX:EVN) just over three years to earn its 75% stake in the Cue joint venture with Musgrave Minerals (ASX:MGV) after spending the full $18m exploration budget well before the end of the five-year agreement.
The pair have now formed an unincorporated joint venture, with Evolution as the major partner, operator of the JV and manager of the ongoing exploration.
The JV, which is primarily focused on Lake Austin, excludes all of Musgrave’s 100% owned resources at the Lena, Break of Day, White Heat-Mosaic and Big Sky deposits, and the Mainland option area.
This lucrative partnership with Evolution has landed Musgrave on the radar of various analysts, including Argonaut’s Eddie Rigg who has pinpointed the company as a potential takeover target.
Argonaut has raised its valuation to 40c, implying 82% upside on the current share price, and rated Musgrave a speculative buy.
It’s probably not surprising the haste at which Evolution has completed the earn-in given the pace at which new high-grade gold discoveries continue to be made.
In October last year, diamond drilling at the West Island prospect returned significant high-grade intercepts including 1m at 74.2 grams per tonne (g/t) from 410m.
Drilling at West Island was targeting the key mineralised gold lodes to determine the scale of the system.
Just three months earlier, Musgrave and Evolution reported a top hit of 2m at 66g/t, including 0.6m at a bonanza 219g/t, from 438m.
With the formation of the JV, Musgrave has the right to contribute to ongoing exploration pro-rata to maintain its 25% interest following approval of a proposed budget or the company can elect to dilute.
A JV committee will be established and meet early in the first quarter of 2023.
A data review is currently underway and a program and budget for ongoing exploration is being prepared by Evolution for consideration by the JV committee.
This article was developed in collaboration with Musgrave Minerals, 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.