(TheNewswire)
Vancouver, British Columbia – TheNewswire - May 9, 2023: Headwater Gold Inc. (CSE:HWG) (OTC:HWAUF) (the"Company" or "Headwater") is pleased to announce it has signed a definitive option andearn-in agreement (the “Earn-in Agreement”) with a wholly ownedsubsidiary of Newcrest Mining Limited (“Newcrest”) (ASX, TSX,PNGX: NCM) on the Company’s Lodestar Project in Nevada(“Lodestar” or the “Project”).
Pursuant to the Earn-in Agreement, Newcrest will havean option to acquire (the “Earn-In Transaction”) up to a 75%interest in Lodestar for cumulative earn-in exploration expendituresof US$30,000,000 and the completion of a Pre-Feasibility Study whichincludes a minimum resource of 1.5 million gold or gold equivalentounces.
Highlights:
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Newcrest will sole fund a minimum commitment ofUS$2,000,000 in exploration expenditures on the Lodestar project, orpay the difference to Headwater;
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During the staged earn-in phase, Newcrest will have theright to earn up to a 65% interest in the Project by sole fundingexploration expenditures of US$30,000,000 over a 6-year period;
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Newcrest retains the right to earn an additional 10%interest in the Project (for a total interest of 75%) by: (1) ceding a2% Net Smelter Return (“NSR”) royalty to Headwater on claims 100%owned by the Company and a 1% NSR royalty on inlying claims subject toan underlying option agreement and (2) completing a Pre-FeasibilityStudy, solely funded by Newcrest which includes a minimum 1.5 millionounce gold or gold-equivalent resource within an additional 24-monthperiod; and,
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Newcrest will reimburse all expenditures previouslyincurred by the Company on the Project through a cash paymenttotalling US$77,759.
Caleb Stroup, the President and CEO of the Company,states: “We are veryexcited to partner with Newcrest again on yet another high-qualityexploration project in the Headwater portfolio. Our ongoingrelationship with Newcrest has allowed us to quickly and effectivelyadvance a number of our projects and we look forward to expanding thisrelationship through the inclusion of the Lodestar project. Thestructure of the Earn-In Transaction offers our shareholders apotential carried Project interest to the completion of aPre-Feasibility Study and a back-end net smelter royalty. Thistransaction is another demonstration of the ability of the Headwaterteam to execute our hybrid business model and build significant valuefor shareholders through early-stage exploration.”
Figure 1. Lodestar land position showingrelation to the Company’s Spring Peak project and Hecla MiningCompany’s (“Hecla”) adjoining past-producing Aurora minecomplex.
About the LodestarProject:
The Lodestar project is located in the Aurora MiningDistrict of west-central Nevada and adjoins Hecla’s past-producingAurora mine complex (Figure 1), where existing infrastructure includesa 350 ton per day mill, several production water wells andhigh-voltage, three-phase power. The Project is located north of theCompany’s Spring Peak project, where Headwater recently announcedthe new Disco and Opal Ridge high-grade discoveries (see Figure 1, andHeadwater news release dated March 2, 2023).
Figure 2. Simplified geologic map of theLodestar project area showing zone of strong silicification and sinterexposure as well as historic rock chip sample locations.
Historic exploration at the Project focused on surface rock chipsampling of the prominent silicified ridgeline at the core of theProject, sampling of a short historic adit (Figure 2) and thecompletion of several shallow drill holes in this immediate area. Drilling completed on the Project by Echo Bay Exploration andBorealis Exploration in the 1980’s reportedly consisted of fourshallow drill holes immediately adjacent to the silicified ridgeline,designed to test for near-surface bulk-tonnage type mineralization. Headwater has obtained assays but not the exact collar and surveyinformation for these historic holes, the deepest of which reached amaximum total depth of 91.44 metres and contained a 10.67 m intervalgrading 0.29 g/t Au. The Company interprets the anomalous goldobserved in the historic drilling above the interpreted epithermalboiling zone to be a positive indicator for precious metal bearingstructural feeders at depth, which remain untested.
Table 1: PrincipalStructure of the Earn-In Agreement:
Stage | Expenditures (US$) | Newcrest Interest (%) | Time for Each Stage |
Minimum Commitment | $2,000,000 | 0% | 24 Months |
Stage 1 1 | $10,000,000 | 51% 2 | 36 Months 1 from Execution Date |
Stage 2 | +$20,000,000 | 65% | 36 Months from commencement of Stage 2 |
Stage 3 3 | Completion of PFS | 75% | 24 Months 4 fromcommencement of Stage 3 |
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Terms of theAgreement:
Newcrest shall make a cash payment of US$77,759 toHeadwater within 15 business days of the Execution Date as areimbursement of 100% of Headwater’s acquisition and explorationexpenditures incurred on the Project. Newcrest will sole fundguaranteed exploration expenditures of US$2,000,000 over a 24-monthperiod as a minimum commitment or pay the difference to Headwater. Upon completion of the upfront cash payment and minimum commitmentexpenditures, Newcrest may elect to proceed to the earn-in phase ofthe transaction.
Stage 1 :
Newcrest may elect to earn a 51% interest in theProject by sole funding expenditures of US$10,000,000 (which includesthe Minimum Commitment) within 36 months of the Execution Date. IfNewcrest fails to meet the Stage 1 earn-in expenditure amount,Headwater will retain 100% ownership of the Project with no interestearned by Newcrest.
Stage 2:
Newcrest may elect to earn an additional 14% interestin the Project, for a total 65% interest, by sole funding additionalexpenditures of US$20,000,000 within 36 months following completion ofStage 1. If Newcrest initiates but does not complete Stage 2, itsinterest will revert to 49%, which Headwater retains the right topurchase at a mutually agreed price or, if a price cannot be mutuallyagreed within a specified period, for Fair Value.
Stage 3:
Newcrest may elect to earn an additional 10% interestin the Project, for a total 75% interest, by completing thefollowing:
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Ceding a 2% NSR royalty to Headwater on claims 100%owned by Headwater and a 1% NSR royalty on claims subject to anunderlying option agreement. Newcrest retains the right to buy back50% of each NSR royalty for Fair Value at any time; and
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Delivering to Headwater a Pre-Feasibility Study for theProject, solely funded by Newcrest which includes a minimum 1.5million ounce gold or gold-equivalent resource within an additional24-month period following the completion of Stage 2.
2023 WorkPlan:
The exploration model that the Company intends todeploy at Lodestar is similar to that used at the Company’s nearbySpring Peak project. A combination of geological mapping, surfacesampling and geophysics will be utilized to further define thehighest-priority targets to test for high-grade epithermal veinmineralization in interpreted structural feeder zones below andadjacent to the outcropping alteration.
The Company is planning a controlled-sourceaudio-frequency magnetotelluric (“CSAMT”) resistivity survey toidentify high-resistivity targets at depth and explore beneath theexposed epithermal alteration as well as the shallow, young volcaniccover that blankets most of the Project masking the underlyingprospective geology. Concurrently, the Company intends to complete asoil sampling program. Detailed geologic mapping and infill rockchip sampling focused on the core area of exposed alteration will alsobe completed with the aid of high-resolution drone imagery and adigital surface model. The results of this preliminary work will beused to design a potential maiden drill campaign at theProject.
UnderlyingAgreement:
The Lodestar project consists of a combination ofunpatented mining claims staked by Headwater and a small number ofunpatented mining claims acquired through an option agreement with aprivate prospector (the “Vendor Claims”). By making an initialcash payment of US$20,000 and escalating annual payments, Headwaterretains a 30-year option to purchase an undivided 100% interest in theVendor Claims for a one-time payment of US$1,500,000 subject to a 3%NSR royalty, of which 2% can per purchased at any time forUS$3,000,000 resulting in a post-buydown residual 1% NSR.
Agate Point Update:
Further to the Company’s news release dated March 2,2023 announcing the results of the Phase I drill program on the AgatePoint project, Newcrest has completed the minimum expenditurecommitment of US$500,000 on the project and has elected not to proceedto the Phase I earn-in of 51% interest in Agate Point. Accordingly,Newcrest has provided notice to Headwater that it is terminating itsoption on the project. No further work is planned on the project atthis time.
About Headwater Gold:
Headwater Gold Inc. (CSE: HWG, OTCQB: HWAUF) is atechnically-driven mineral exploration company focused on theexploration and discovery of high-grade precious metal deposits in theWestern USA. Headwater is aggressively exploring one of the mostwell-endowed and mining-friendly jurisdictions in the world with agoal of making world-class precious metal discoveries. Headwater hasa large portfolio of epithermal vein exploration projects and atechnical team comprised of experienced geologists with diversecapital markets, junior company and major mining company experience. The Company is systematically drill testing several projects inNevada, Idaho, and Oregon and in August 2022 announced a significanttransaction with Newcrest Mining Limited where Newcrest acquired a9.9% strategic equity interest in the Company and entered into severalearn-in agreements on Headwater’s projects.
For more information, please visit the Company'swebsite at www.headwatergold.com .
On Behalf of the Board ofDirectors
Caleb Stroup
President and CEO
+1 (775) 409-3197
For further information, please contact:
Brennan Zerb
Investor Relations Manager
+1 (778) 867-5016
Qualified Person:
The technical information contained in this newsrelease has been reviewed and approved by Scott Close, P.Geo (158157),a “Qualified Person” (“QP”) as defined in National Instrument43-101 – Standards of Disclosure for Mineral Projects.
Forward-Looking Statements:
This news release includes certainforward-looking statements and forward-looking information(collectively, “forward-looking statements”) within the meaning ofapplicable Canadian securities legislation. All statements, other thanstatements of historical fact, included herein including, withoutlimitation, statements regarding future capital expenditures,exploration activities and the specifications, targets, results,analyses, interpretations, benefits, costs and timing of them,Newcrest’s anticipated funding of the earn-in projects and thetiming thereof, and the anticipated business plans and timing offuture activities of the Company, are forward-looking statements.Although the Company believes that such statements are reasonable, itcan give no assurance that such expectations will prove to be correct.Often, but not always, forward looking information can be identifiedby words such as “pro forma”, “plans”, “expects”,“may”, “should”, “budget”, “scheduled”,“estimates”, “forecasts”, “intends”, “anticipates”,“believes”, “potential” or variations of such words includingnegative variations thereof, and phrases that refer to certainactions, events or results that may, could, would, might or will occuror be taken or achieved. Forward-looking statements involve known andunknown risks, uncertainties and other factors which may cause theactual results, performance or achievements of the Company to differmaterially from any future results, performance or achievementsexpressed or implied by the forward-looking statements. Such risks andother factors include, among others, risks related to the anticipatedbusiness plans and timing of future activities of the Company,including the Company’s exploration plans and the proposedexpenditures for exploration work thereon, the ability of the Companyto obtain sufficient financing to fund its business activities andplans, the risk that Newcrest will not elect to obtain any additionalinterest in the earn-in projects in excess of the minimum commitment,the ability of the Company to obtain the required permits, changes inlaws, regulations and policies affecting mining operations, theCompany’s limited operating history, currency fluctuations, titledisputes or claims, environmental issues and liabilities, as well asthose factors discussed under the heading “Risk Factors” in theCompany’s prospectus dated May 26, 2021 and other filings of theCompany with the Canadian Securities Authorities, copies of which canbe found under the Company’s profile on the SEDAR website atwww.sedar.com.
Readers are cautioned not to placeundue reliance on forward-looking statements. The Company undertakesno obligation to update any of the forward-looking statements, exceptas otherwise required by law.
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