Agnico Eagle Mines (AEM.TO, AEM) has announced it will enter in a joint venture with Orex Minerals (REX.V) whereby it can earn up to 70% in Orex’ Barsele gold project in Sweden. Agnico can earn an initial 55% by making cash payments to Orex totalling $10M of which $6M has to be paid up-front with two subsequent annual cash payments of $2M. On top of that, Agnico Eagle needs to spend $7M in exploration expenditures in the first three years after signing the agreement.
Agnico has the option to increase its stake to 70% by completing a pre-feasibility study and giving Orex Minerals a 2% NSR (which can be purchased by Agnico for $5M). It will be very interesting to see if the Agnico team will be able to increase the resources at Barsele as we didn’t think there was much additional potential at the property. This joint venture agreement seems to be an excellent deal for Orex Minerals as it will allow the company to advance the property whilst topping up its cash balance.
> Click here to go to Orex’ website
Disclosure: The author holds no position in either Agnico-Eagle or Orex Minerals. Please see our disclaimer for current positions.
