Major nickel producer Western Areas (ASX:WSA) has entered into a farm-in and joint venture agreement with a subsidiary of Iluka Resources (ASX:ILU) to further advance its regional exploration strategy in South Australia.

The agreement allows Western Areas to acquire up to a 75-percent interest in base and precious metals rights, along with all basement-hosted minerals and rare earths, across five major tenements in the Western Gawler region: EL 5217, EL 5452, EL 5675, EL 5878 and EL 5879. For its part, Iluka will retain all rights to mineral sands elements.

Western will make the acquisition in two stages. During the first, under which Western will earn 51 percent, the company will spend $2.75 million within three years, with a minimum of $0.75 million being spent in the first year and an additional $1 million being spent over the second and third years.

The second stage, which will increase Western’s interest to 75 percent, entails Western spending another $3 million over an additional four years.

According to Western, the licenses hold significant potential for high-grade massive sulfide polymetallic mineralization, iron oxide-copper–gold (IOCG) and orogenic gold deposits. Managing Director Dan Lougher explained the company’s thoughts behind expanding its exploration space in a statement.

“Western Areas has been conducting due diligence on a number of farm-in and joint venture opportunities as part of our regional exploration strategy and we are extremely pleased to extend our existing presence in the Western Gawler via this new opportunity. We believe it offers the significant additional discovery potential that we are looking for,” he said.

“Our exploration team is ready to begin a work program aimed at identifying high priority drill targets, building on the significant geophysical programs and target generation work that Iluka has completed over the last 4 years,” Lougher added.

Western has been exploring the Western Gawler region for many years, and was keen to form the joint venture with Iluka to gain additional access to the Fowler Domain, part of Iluka’s Eucla Basin area.

The tenements in the joint venture, which span 5,070 square kilometers, are adjacent to Western’s existing holdings in the area. Western Areas bills itself as Australia’s leading nickel producer, and its main assets are its Flying Fox and Spotted Quoll mines, located at its Forrestania project in Western Australia.

The company’s share price was at AU$3.24 at close of day on Tuesday (July 31), down 0.61 percent. Meanwhile, Iluka’s was at AU$11.45, up 1.33 percent.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.