News: Nexus Minerals shares fly on farm-in with regional heavyweight

Nexus Minerals (ASX:NXM) shares jumped 23% to A$0.064 after the company entered into a farm-in and joint venture over the Pinnacles gold project in Western Australia with Saracen Mineral Holdings Limited (ASX:SAR).

This investment reflects Nexus’ strategy of investing in advanced gold exploration assets and includes an ore sale and purchase agreement, whereby any future ore mined from the Pinnacles will be purchased by Saracen for processing through its Carosue Dam processing plant 13 kilometres to the north of the project area. 

Under the deal, Nexus will be the sole manager of the Pinnacles and will be able to earn up to 85% of the project by satisfying a series of staged farm-in milestones with specific exploration expenditure commitments required to increase its interest.

Upon Nexus reaching 85% ownership, a contributing JV will be established, with each party contributing in proportion to its joint venture interest.  

Nexus will pay annual milestone contributions of $200,000 over five years, earning a 25% stake in the first year and a 50% stake in the second year. Subsequent annual contributions will increase the company’s holding by smaller increments until year five when an 85% stake will be obtained.

Nexus shall have access to the Carosue Dam Mine facilities, infrastructure and mine village.

The project contains a resource of 413,000 tonnes at 2.1 grams per tonne gold for 28,000 ounces of gold and is defined to a depth of only 150 metres.  Mineralisation remains open at depth, and to the north and south along strike.

The farm-in and JV not only allow Nexus the opportunity to access a project with significant exploration results to date and high expectations for further exploration success, but they also allow access to the Carosue Dam mine facilities, infrastructure and access roads.

Upon establishment of any future mining operation on the Pinnacles tenement, the ability to access the Carosue Dam plant would eliminate the need for any processing plant capital.

Saracen is responsible for all treatment and royalty costs.

As of the end of June, Nexus held $6.25 million in cash.