Shares in Havilah Resources Ltd (ASX: HAV) have jumped more than 30% after the company announced a major mine development deal with Sandfire Resources Ltd (ASX: SFR) worth up to $240 million.
The companies announced on Thursday that Sandfire would earn up to 80% of Havilah's Kalkaroo copper and gold project in South Australia by investing an initial $105 million immediately, followed by a further $105 million upon completion of a new prefeasibility study.
The initial $105 million investment would be made up of 30% cash and 70% Sandfire shares.
Sandfire has also committed to spend $30 million on regional exploration across a two-year period.
Mine has a clear path to development
The companies said in a joint statement to the ASX that the investment from Sandfire would establish a "rapid pathway" to the development of the Kalkaroo project in the east of South Australia, which Havilah has been working on for more than two decades.
The deal, which also involves a minimum of 20,000 of infill and resource extension drilling at Kalkaroo, would enable the companies to "potentially expand" the existing ore reserve of 100 million tonnes of ore, with a grade of 0.47% copper and 0.44 grams per tonne of gold.
It is envisaged that the updated prefeasibility study will be completed in the next 18 to 24 months.
Sandfire Managing Director Brendan Harris said the project was a good fit for his company.
He went on to say:
We are thrilled to have the opportunity to work with the Havilah team to de-risk the Kalkaroo copper-gold project, which is in a preferred jurisdiction with ready access to key road, rail and energy infrastructure and ground water supply, and skilled labour from Adelaide, Broken Hill and the broader regional community. The decision to move into the Curnamona Province in South Australia is fully aligned with our strategy and has the potential to replicate our successful entry into the Kalahari Copper Belt.
Havilah Managing Director Dr Chris Giles said the binding agreement made good sense for Havilah shareholders, enabling the company to progress Kalkaroo while also gaining exposure to Sandfire through the share issue.
Dr Giles said:
Exposure to longer-term value is also achieved via Havilah's retained 20% interest in Kalkaroo. The funding under the exploration strategic alliance will allow us to accelerate regional exploration in South Australia with the objective of transforming the highly prospective Curnamona Province into Australia's next major copper province, centred on the Kalkaroo project development.
Havilah shares were trading 31.5% higher in early trade on Thursday at 35.5 cents, while Sandfire shares were 0.9% higher at $16.59.
