THE exploration food chain usually involves a major chipping into a small caps' promising project, but in this case Great Western is farming into Glencore Xstrata's Cunya copper-gold prospect in WA's Doolgunna region.
The five Cunya exploration licences expand Great Western's coverage from 780sq km to 3300sq km, in a region thought to be an extension of the geological belt hosting Sandfire's de Grussa copper mine. Great Western chief Jordan Luckett says Glencore is a producer rather than an explorer, with Xstrata acquiring the ground when it took over nickel producer Jubilee Mines.
Under the JV, Great Western can earn up to 70 per cent by spending $2.5m across five years. Glencore also can claw back to 80 per cent of the project by compensating Great Western three times its exploration costs when a compliant resource is established.
Luckett reasons that if any discovery is big enough for its partner to be interested in, Great Western wouldn't have the funds to back the project.
Great Westernologists believe the potential lies in Kazakhstan, where the company has partnered with national miner Tauken Samruk to explore 12,500sq km with eight known copper deposits and 350 known "occurrences". The ground was (inadequately) worked over by the Soviet Union before it ran out of roubles.
This JV allows Great Western to earn 50 per cent by contributing a maximum $US12.5m. Having finally procured a rig, the start of drilling is imminent.
Some wags reckon the best investment is to avoid going near any nation ending in "stan", especially one with Borat as its ambassador. Luckett says dealing with the bureaucracy is hard going. But he says they'll deal with him if only because he refuses to go away.
Great Western is a spec buy, on the proviso it needs to raise equity. Here's hoping director and holder Craig Mathieson can liberate his billionaire uncle Bruce's small change from the pokies.
GTE Price at posting:
18.1¢ Sentiment: ST Buy Disclosure: Held
