Andromeda Metals Ltd. struck a deal with Evolution Mining Ltd. to form a joint venture for the Drummond gold project in north Queensland, Australia.
Under the terms, Evolution will pay A$300,000 within 10 business days of signing the deal. To earn an initial 51% stake, the company must solely fund A$2 million in exploration within two years of executing the agreement.
Evolution has the option to acquire an additional 29% interest, for a total 80% stake in the project, by paying A$200,000 within 10 days of the election and spending a further A$4 million for two more years.
On completion of Evolution's commitments, either party may elect not to contribute to the proposed joint venture program and budget. If that happens, their interest in the joint venture will be diluted.
If any party dilutes to less than a 10% equity interest in the joint venture, that party is considered to have converted its stake to a 2% net smelter royalty on the project, capped to a maximum of A$10 million.
Evolution will manage and operate the joint venture while making the commitments.
Andromeda said Sept. 3 that the transaction will allow for the exploration of several promising prospects at Drummond, including Bunyip, and will enable the company to focus on the Poochera halloysite-kaolin project in South Australia.
The Drummond project comprises four tenements in the northern Drummond Basin, which hosts Minjar Gold Pty. Ltd.'s Pajingo gold mine.