Barrick Gold Corp. will spend about C$55 million through an exploration earn-in to acquire up to a 70% interest in ATAC Resources Ltd.'s Orion gold project, part of the latter's Rackla property in Canada's Yukon Territories.
The gold major will also invest C$8.3 million in ATAC through a private placement of 16,684,800 flow-through common shares at 50 Canadian cents each. Barrick's stake in ATAC will increase to about 19.9% from about 9.2% currently upon closing, which is expected May 3.
Under the earn-in deal, Barrick will spend C$35 million over five years to earn a 60% project stake and another C$20 million for a further 10% interest in the Orion project.
Upon completion of the first exploration earn-in, the parties will establish a joint venture, with Barrick and ATAC holding interests of 60% and 40%, respectively.
If Barrick withdraws from the exploration earn-in after spending C$10 million on exploration and before reaching C$35 million, it will not acquire any interest in the project. Also, should Barrick decide not to exercise its right to acquire the additional 10%, ATAC can purchase a 10.1% interest in the joint venture from Barrick.
Meanwhile, in the event that either party's joint venture stake is reduced to 10% or less, that party's interest in the project will convert to a sliding-scale net smelter return royalty on gold, adjusted for changes in gold price and cumulative gold production.
The sliding-scale NSR will range from 1% to 3% with no buyout provision. Silver will be subject to a 2% fixed net smelter return royalty, while all other commodities will be subject to 1%, also with no buyout option.
ATAC plans to use part of the flow-through placement proceeds to fund the previously announced C$10 million 2017 exploration program at the Osiris and Rau projects, which are not subject to the Barrick earn-in agreement.
According to the April 10 release, the Orion project hosts the Orion and Anubis drill confirmed Carlin-type gold discoveries in addition to eight other early stage Carlin-type gold prospects.