GFG Resources (TSXV: GFG) has signed a definitive earn-in agreement giving Barrick Gold, a subsidiary of Barrick Mining (TSX: ABX), a path to majority ownership of its Pen Gold Project in Ontario’s Timmins Gold District.
Barrick can earn an initial 60% interest by funding $17.68 million in exploration and project expenditures, paying GFG $1.2 million in cash, and delivering an NI 43-101 technical report outlining a resource of at least 1.5 million ounces of gold or gold equivalent within six years.
The cash comes in in tranches, amount to $420,000 on signing, then $130,000 annually over the six year term.
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Barrick has firmly committed to $4 million of that exploration spend within the first three years, including at least 5,000 metres of diamond drilling before the third anniversary. Withdraw before meeting it and Barrick owes GFG the shortfall in cash. Clear it, and the miner can walk with nothing.
From there, the options stack. The initial earn-in is expected to trigger a joint venture split 60-40 in Barrick’s favour. Within 60 days of formation, Barrick can elect to move to 70% by funding a preliminary economic assessment, and then to 80% by funding a feasibility study.
Barrick will operate the project through the earn-in period. GFG keeps quarterly reporting, site access and technical review rights.
Pen covers roughly 475 square kilometres about 50 kilometres southwest of Timmins, sitting between Discovery Mining’s Borden Gold Mine and Pan American Silver’s Timmins West Mine, with highway, rail and power corridors running through it. The Archean greenstone package hosts the interpreted western extension of the Porcupine-Destor structural corridor.
“This partnership represents a significant value-creating opportunity for shareholders and a strong endorsement of Pen’s scale and quality,” said President and Chief Executive Officer Brian Skanderbeg, adding that the arrangement keeps GFG’s team and treasury pointed at its wholly owned Goldarm property.
GFG Resources last traded at $0.23 on the TSX Venture.
