Encounter Surged On ASX Post Extending The Joint Venture Exploration Area With Newcrest

Encounter Surged On ASX Post Extending The Joint Venture Exploration Area With Newcrest

Encounter Resources Limited (ASX: ENR) announced on 12th March that the company expanded its Joint Venture with Newcrest Mining Limited (ASX: NCM). The company along with Newcrest expanded the Aileron and Selby joint Ventures by securing an additional 1,400km square of the Tanami Gold Provinces and West Arunta in Western Australia.

The Selby joint venture hosts a number of geochemical anomalies defined in shallow drilling, and the project covers the most western end of the West Tanami Project area. The Selby Joint venture also contains discrete geophysical targets and historical high-grade gold intersections in limited deeper drilling. The company is currently prioritizing and generating targets, and the company stated that Mohave and Afghan Prospect is presently among the high priority prospects at the Selby Project.

Mohave Prospect is a 7km long gold-arsenic anomaly that includes thick mineralised drill intersections, which strength towards the east of the prospect at the bottom of the hole.

Afghan Prospect is a 7.5km long gold anomaly in shallow RAB drilling.

The new exploration licence of the expanded joint venture covers the east and north area of the Mohave and Afghan prospect and is scheduled to drill in 2019.

The company expanded another project located in the Arunta district of West Arunta, the Aileron Joint venture project, which had no previous mineral exploration, albeit gold and copper mineralisation has been identified in the provinces. The company undertook an aeromagnetic survey and identified structural targets, including a discrete magnetic anomaly consistent with the scale of Ernest Henry or Carrapateena style system.

The company modelled the anomaly as a steeply dipping magnetic body and is approx.400m in diameter, starting from approx — 150m below the surface and falling sharply to a depth of 1km. The survey also identified a structural architecture adjacent to the magnetic anomaly and observed it be conducive to major fluid flow.

The new joint venture project extended the tenements towards east to cover over a 70km segment of West Arunta. As per the company, the expanded region hosts various zones of magnetic alteration and structural complexity and subtle gold and bismuth soil geochemical anomalies.

Joint Venture Terms:

The company is in several joint ventures with Newcrest mining limited such as Selby, watts, Lewis, Phillipson, etc. The critical terms over most of the Joint venture agreement remain somewhat the same as per the company.

As per the terms, Encounter has an option to maintain 50% interest in all the joint ventures, provided that the company contributes its share for exploration expenditure and if the company choose not to contribute on a 50:50 basis, Newcrest can extend its interest to 80% by sole funding on exploration activities and delivering a JORC classified inferred resource of greater than 1 million ounces of gold.

Upon identification and notification of a JORC inferred resources, Encounter can maintain a 20% stake by funding its share of the expenditure or else Newcrest will acquire the company’s joint venture interest for fair value.

In case of encounter interest falls below 10%, the company will be eligible for a 2% net smelter royalty, and if Newcrest interest falls below 10%, the company’s interest will be transferred to Encounter.

Along with that Encounter have a right of selling its interest to the third-party.

The expansion in the Joint Venture is in line with Newcrest path of acquisition and Joint Ventures to expand the portfolio of the company. Recently Newcrest entered in a Joint Venture with Imperial Metals as well to host the Res Chris Mine.

During the time of writing this report the share of the company closed on a positive note on ASX at A$0.075 (as on 12th March, 05:41 PM), up by 8.696% as compared to its previous close.


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