Prodigy Surges on Joint Venture Gold Deal with Newmont

Shares of Prodigy Gold (ASX:PRX) climbed almost 11 percent following Thursday’s (May 16) announcement that the Australian miner is entering into an exploration farm-in and joint venture (JV) agreement with gold major Newmont Goldcorp (TSX:NGT,NYSE:NEM).

Under the terms of the deal, Newmont Goldcorp will spend AU$6 million on exploration over the course of four years, and make a AU$1.5 million non-refundable payment on the signing of the agreement. In return, the miner will earn a 51 percent interest in Prodigy’s Tobruk project.

During Phase 2 of the agreement, Newmont Goldcorp has the ability to increase its interest in Tobruk to up to 70 percent by making an additional AU$1 million cash payment to Prodigy.

The gold major would also have to spend an extra AU$6 million on exploration within a three-year period or define a JORC resource of over 500,000 ounces.

Once Newmont Goldcorp has either earned its 70 percent interest in the project or ceased to fund exploration after earning its 51 percent interest, Prodigy will be responsible for project costs going forward.

However, Newmont Goldcorp could fund Prodigy’s share of future expenditure and joint venture costs until Tobruk reaches commercial production, which would in return increase the gold major’s interest in the project to 75 percent.

“Prodigy now has in excess of AU$33 million in funding agreements from JV partners to accelerate discovery across the company’s entire exploration portfolio,” Briggs said.

He continued, “Further, we remain committed to unlocking the value of our 100 percent owned projects and the cash payment received from Newmont Goldcorp as entry into the Tobruk JV allows this strategy to continue at pace.”

Looking ahead, permitting of heritage clearances is already under way at Tobruk, and groundwork is expected to start in the coming weeks.

Both companies anticipate that the deal will close sometime during Q2 of this year.

As for the project itself, Tobruk covers the the area that hosts Newmont Goldcorp’s Callie gold deposit, as well as a variety of other smaller deposits, including Groundrush and Titania-Oberon.

As of 11:18 a.m. EDT on Thursday, Prodigy was up 10.47 percent, trading at AU$0.10; meanwhile, Newmont Goldcorp fell 1.31 percent to trade at C$40.66.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.