OceanaGold (OGC.TO, ASX:OGC) recently signed a definitive agreement with Renaissance Gold (REN.V) which allows it to acquire a 75% interest in the Spring Peak gold project in Nevada. As per the terms of the agreement, OceanaGold can earn an initial 51% by spending US$4M in exploration over a 5-year period, while it will also have to make a total of US$215,000 in cash payments to Renaissance. US$4M in exploration is quite a lot, but Oceana will only have to spend US$150,000 in the first twelve months as part of a fixed commitment.
Once it has established its initial 51% stake, OceanaGold has the right to increase its stake to 75% by spending an additional US$6M on the project within a new 4-year period. This means OceanaGold can secure a 75% stake in the property for a total of US$10.2M in expenses, of which 98% (US$10M) will be spent on the property instead of in cash payments to the vendor.
Oceana should be able to gain a lot of additional insight in the property which hosts a low-sulphidation epithermal gold system which hasn’t been drilled since the 1990’s. Those historic drill programs encountered anomalous gold values in (almost?) every drill hole, and Renaissance Gold has already outlined several exploration targets where both partners will now chase high-grade gold vein structures.