Inc. (CSE: HWG) (OTCQB: HWAUF) (the “Company” or
“Headwater”) is pleased to announce it has signed four separate definitive
option and earn-in agreements (the “Earn-in Agreements”) with a wholly owned
subsidiary of Newcrest Mining Limited (“Newcrest”) (ASX, TSX, PNGX: NCM). Pursuant to the Earn-in Agreements, Newcrest
will have an option to acquire (the “Earn-In Transaction”) up to a 75% interest
individually in each of Headwater’s Mahogany Project in Oregon and Agate Point
Project, Midas North Project, and Spring Peak Project in Nevada (collectively,
the “Projects”) for cumulative earn-in exploration expenditures of US$145,000,000
and the completion of Pre-Feasibility Studies which include a minimum resource
of 1.5 million gold or gold equivalent ounces per Project. Additionally, Newcrest will acquire a 9.9%
equity interest in the Company through a non-brokered private placement of
Newcrest will sole fund a firm minimum commitment (“Minimum
Commitment”) of US$8,500,000 in exploration expenditures cumulatively between
the four Projects, or pay the difference to Headwater;
During the staged earn-in phase, Newcrest will have the
right to earn up to a 65% interest individually in each of the four Projects by
sole funding exploration expenditures (inclusive of the respective Minimum
Commitment) of US$55,000,000 on the Spring Peak Project, US$30,000,000 on the Agate Point Project, US$30,000,000 on the Mahogany Project, and US$30,000,000 on the Midas North Project over a 6-year period;
Newcrest retains the right to earn an additional 10% interest
in each Project (for a total interest of 75% of each Project) by: (1) ceding a 2% Net Smelter Return (“NSR”) royalty to Headwater in the case of the Agate Point, Mahogany and Midas North Projects, and a 1% NSR
royalty in the case of the Spring Peak Project, subject to certain partial
buydown rights; and (2) completing a Pre-Feasibility Study for such Project, solely
funded by Newcrest and which includes a minimum 1.5 million ounce gold or
gold-equivalent resource (per Project) within an additional 24-month period;
Newcrest will, within 15 business days of signing of
the Earn-in Agreements (the “Execution Date”), reimburse certain Project costs
previously incurred by Headwater through a cash payment totaling US$612,989;
Newcrest will purchase, through a non-brokered
private placement, 5,446,397 common shares of the Company at a price of $0.16
per share for gross proceeds of $871,424, representing an approximate 9.9%
ownership interest in the Company.
Caleb Stroup, Headwater’s President and CEO,
states: “We are extremely pleased to welcome Newcrest as a funding partner
and shareholder. This transaction
provides a very attractive mechanism to maintain our aggressive, discovery-focused
exploration strategy across our high-quality project portfolio. The proceeds of the transaction will allow
Headwater to continue self-funding our highest-priority 100% owned opportunities,
while Newcrest’s project-specific funding will allow for the rapid advancement of
several projects which require a scale of exploration expenditure and drilling currently
impractical for Headwater. Our potential
carried Project interests to the completion of Pre-Feasibility Studies and back-end
royalties ensure that shareholders retain significant upside on these Projects with
minimum corporate dilution. We believe
this transaction underscores the ability of the Headwater team to execute our business
model and build significant accretive value through early-stage exploration. We look forward to working with Newcrest and
will continue to develop and execute on additional priority opportunities outside
of the four earn-ins.”
Fraser MacCorquodale, Newcrest’s GM
Exploration, states: “We are excited to partner with Headwater on these projects.
The Great Basin is a great location for discovering high-grade gold epithermal
deposits. We are also pleased to partner
with an experienced and technically strong management team at Headwater and leveraging
the exploration capability of both teams represents an opportunity to create significant
Commitment for Spring Peak includes an initial US$2,500,000 plus an
additional US$2,500,000 (the “Additional Spring Peak Minimum Commitment”) over
an additional 12 months following the completion of certain permitting
1 is inclusive of the Minimum Commitment.
Newcrest completes Stage 1 but not Stage 2, its ownership interest is reduced
to 49%, which Headwater retains the right to purchase at a mutually agreed
price or, if a price cannot be mutually agreed within a specified period, for a fair value that will be determined based on an agreed-upon process (“Fair
completion of Stage 3, Headwater will be ceded a 2% NSR in the case of the
Midas North, Mahogany, and Agate Point Projects, and a 1% NSR in the case of
the Spring Peak Project. The NSR’s are
all subject to partial buyback provisions.
Newcrest to sole fund the completion of a
Pre-Feasibility Study which is required to include a minimum 1.5 million
ounce gold or gold-equivalent resource.
Terms of Earn-in Agreements:
The Earn-in Agreements signed on August 15, 2022, provide that Newcrest
shall make certain cash payments and incur exploration expenditures individually
in each of the four Projects to acquire an initial 51% interest in each Project,
and retain a further option to increase in a three-stage earn-in as follows
(also see Table 1):
Upfront Cash Payment:
Newcrest will make a cash payment of US$612,989 to Headwater
within 15 business days of the Execution Date, as reimbursement for 100% of
Headwater’s expenditures incurred to date on the Spring Peak Project and certain
land payment costs incurred by Headwater related to the Midas North Project,
Agate Point Project, and Mahogany Project.
Minimum Commitment Expenditures:
Newcrest is obliged to sole fund guaranteed exploration expenditures
over a 24-month period as follows:
Agate Point: US$500,000
Midas North: US$2,000,000
Spring Peak: US$2,500,000
In the case of the Spring Peak Project, Newcrest is obligated to
spend an additional US$2,500,000, bringing the total guaranteed exploration
expenditures to US$5,000,000, within a 12-month period following the receipt of
a full Plan of Operations exploration permit.
Newcrest may elect to earn a 51% interest in each Project
individually by sole funding expenditures of US$10,000,000 per Project (which
includes the Minimum Commitment) in the case of the Agate Point Project,
Mahogany Project, and Midas North Project, and US$15,000,000 (which includes the
Minimum Commitment) in the case of the Spring Peak Project within 36 months of
the Execution Date. If Newcrest fails to
meet either the Minimum Commitment or the Stage 1 earn-in expenditure amount
for a given Project, Headwater will retain 100% ownership of the specific Project
with no interest earned by Newcrest.
Upon Newcrest’s election, Newcrest may earn an additional 14% interest
in each Project individually, for a total 65% interest, by sole funding
additional expenditures of US$20,000,000 per Project in the case of Agate Point
Project, Mahogany Project, and Midas North Project and US$40,000,000 in the case
of the Spring Peak Project within 36 months following completion of Stage 1. If Newcrest initiates but does not complete
Stage 2, its interest will revert to 49%, which Headwater retains the right to
purchase at a mutually agreed price or, if a price cannot be mutually agreed upon within a specified period, for Fair Value.
Newcrest retains an additional right to earn a further 10% interest
in each individual Project, bringing its potential ownership interest to 75%
for each such Project, by completing the following:
Ceding to Headwater a 2% NSR in the
case of the Midas North Project, Agate Point Project, and Mahogany Project and a
1% NSR in the case of the Spring Peak Project. Newcrest retains the right to buy back 50% of each
Project specific NSR for Fair Value at any time; and
Delivering to Headwater a Pre-Feasibility Study for
the respective Project, solely funded by Newcrest, and which includes a minimum
1.5 million ounce gold or gold-equivalent resource within an additional 24-month
period following the completion of Stage 2.
Newcrest will purchase 5,446,397 common shares (each, a “Common
Share”) of the Company at a price of $0.16 per Common Share for gross proceeds
of $871,424 by way of a non-brokered private placement (the “Equity
Transaction”). The private placement
represents a 23% premium to the closing price of $0.13 on the Canadian
Securities Exchange (the “CSE”) on August 12, 2022.
The Equity Transaction will result in Newcrest owning approximately
9.9% of the total issued and outstanding Common Shares of Headwater on a
non-diluted basis immediately following the Equity Transaction. For so long as Newcrest holds not less than
5% of Headwater’s issued and outstanding Common Shares, Newcrest retains the
right to maintain its pro rata interest. If Newcrest does not exercise this right and fails
to maintain its pro rata interest through two consecutive equity financings,
the participation right shall expire.
The proceeds from the Equity Transaction will be used for potential
project acquisitions, ongoing exploration activities on the Company’s 100%
owned mineral projects in Idaho, Nevada, and Oregon, and for general working
All securities issued in connection with the Equity Transaction
will be subject to a statutory hold period expiring four months and one day
after the closing of the Equity Transaction.
About the Agate Point
The 100% owned and royalty-free
Agate Point Project is located in Northwestern Nevada, 50 km along trend from
the historic, bonanza grade Sleeper Gold Mine. The claim block covers a linear ridge of
untested widespread, high-level epithermal alteration with consistent highly
anomalous trace element geochemistry typical of other known epithermal systems.
There has been limited exploration on
the Project and no known exploration for high-grade vein targets.
About the Mahogany Project:
The 100% owned and royalty-free Mahogany
Project is located in Southeastern Oregon, 20 km northwest of Integra
Resources’ (NYSE: ITRG) DeLamar deposit.
Surface alteration at Mahogany is typical of a high-level epithermal system. Headwater’s initial drill program at Mahogany completed
in late 2021 consisted of five diamond core drill holes totaling 810 metres (see
Headwater News Release dated January 27, 2022). Drilling focused on a 500-metre segment of the
Main Ridge Fault zone, which Headwater geologists interpreted as a possible
feeder to the epithermal alteration cell manifest at surface. Drilling confirmed the presence of
structurally-controlled high-grade gold zones, including a drill intercept that
returned 9.37 grams per tonne (“g/t”) gold over a drilled thickness of 0.73
metres in hole MH21-02. Multiple priority
targets on the Project remain to be tested.
About the Midas North
Headwater’s 100% owned and
royalty-free Midas North Project adjoins Hecla Mining Company’s (NYSE: HL) Midas
Mine complex and covers a large hydrothermal alteration cell, extending at
least 4 kilometres in strike and 1 kilometre in width, which is interpreted by
Headwater geologists as representing the high-level manifestations of an
epithermal precious metal system. To date,
90 rock chip samples and 54 stream sediment samples have been collected by the
Company from the Project area which have highlighted several priority areas of
anomalous precious metal values, with highly anomalous values of epithermal
pathfinder elements (see Headwater News Release dated October 4, 2021). Extensive epithermal alteration exists on the Project,
including widespread zones of high-level chalcedonic to opaline silica flooding,
clay alteration, and local sinter formation, including fossilized geyser vents.
The Project has seen very limited
historic exploration with no documented exploration drilling. The Company believes the Project has
potential for high-grade epithermal mineralization at depth similar to that
found at Hecla’s Midas Mine complex.
About the Spring Peak
The Spring Peak Project is
located in the Aurora Mining District of west-central Nevada, approximately 50
kilometres southwest of the town of Hawthorne.
The Project adjoins Hecla Mining’s (NYSE: HL) Aurora mine complex, where
existing infrastructure includes a 350 ton per day mill, several production
water wells, and high-voltage three-phase power.
A large hydrothermal alteration
cell occurs in the center of the Spring Peak Project area, which represents a
high-level manifestation of an epithermal precious metal system. An approximate 5-metre thick silica sinter,
which extends over 500 metres in strike, occurs in the center of this
alteration cell and displays various vent facies textures interpreted to
reflect a high-energy hydrothermal vent environment.
Headwater conducted an initial first-pass reverse circulation drill
program consisting of five holes totalling 1,350 metres. Drilling successfully intersected epithermal
quartz veins at a range of elevations in multiple structures (see Headwater
News Release dated November 22, 2021).
Individual vein zones range from 1.4 to 18.3 metres in drilled width
with the widest zone of veining and mineralization occurring in hole SP21-03,
which intersected a fault-hosted vein zone immediately beneath a mapped silica
sinter at surface. This interval
returned gold values of 1.00 g/t Au over 38.1 metres, including 9.2 metres of
2.49 g/t Au, representing a new, blind gold discovery and a confirmation of the
Headwater exploration model. The
mineralization encountered in SP21-03 is open up and down dip, as well as along
strike. The nearest drill hole which
penetrated to the appropriate depth is SP21-02, approximately 900 metres to the
west, which ended in 16.8 metres grading 0.28 g/t Au. Plans for follow-up diamond core drilling to
be completed in 2022 are in progress.
Headwater holds an option to acquire
a 100% undivided interest in the Spring Peak Project from the underlying owner,
subject to retained royalties.
About Headwater Gold:
Headwater Gold Inc. (CSE: HWG, OTCQB: HWAUF) is a
technically-driven mineral exploration company focused on the exploration and
discovery of high-grade precious metal deposits in the Western USA. Headwater is aggressively exploring one of
the most well-endowed and mining-friendly jurisdictions in the world with a
goal of making world-class precious metal discoveries. Headwater has a large portfolio of epithermal
vein exploration projects, and a technical team comprised of experienced
geologists with diverse capital markets, junior company, and major mining
company experience. The Company is systematically drill-testing several projects in Nevada, Idaho, and Oregon.
For more information, please visit the Company’s website at www.headwatergold.com.
About Newcrest Mining:
Mining Limited (ASX, TSX, PNGX: NCM) is one of the world’s largest gold mining
companies with headquarters in Melbourne, Australia, and operating mines in
Australia, Canada, and Papua New Guinea.
Newcrest is a technical industry leader, with particular expertise in
exploration, deep underground block caving, and metallurgical processing. Newcrest is committed to creating a work
environment where everyone can go home safe and healthy every day, and where
everyone actively contributes to this outcome; operating and developing mines
in line with strong environmental, social, and governance practices; developing
a diverse workforce; and developing and maintaining strong relationships with
communities and governments.
On Behalf of the Board of Directors
President and CEO
+1 (775) 409-3197
For further information, please contact:
The technical information contained in
this news release has been reviewed and approved by Scott Close, P.Geo (158157),
a “Qualified Person” (“QP”) as defined in National Instrument 43-101 –
Standards of Disclosure for Mineral Projects.
This news release includes certain forward-looking statements and
forward-looking information (collectively, “forward-looking
statements”) within the meaning of applicable Canadian securities
legislation. All statements, other than statements of historical fact, included
herein including, without limitation, statements regarding future capital
expenditures, anticipated content, commencement, and cost of exploration
programs in respect of the Company’s projects and mineral properties, completion
and timing of the Equity Transaction and the intended use of proceeds
therefrom, the anticipated acceptance of the CSE of the Earn-In Agreements and
the Equity Transaction, Newcrest’s anticipated funding of the Minimum
Commitment and the timing thereof, and the anticipated business plans and
timing of future activities of the Company, are forward-looking statements.
Although the Company believes that such statements are reasonable, it can give
no assurance that such expectations will prove to be correct. Often, but not
always, forward-looking information can be identified by words such as
“pro forma”, “plans”, “expects”, “may”,
“should”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”,
“anticipates”, “believes”, “potential” or
variations of such words including negative variations thereof, and phrases
that refer to certain actions, events or results that may, could, would, might
or will occur or be taken or achieved. Forward-looking statements involve known
and unknown risks, uncertainties, and other factors which may cause the actual
results, performance, or achievements of the Company to differ materially from
any future results, performance, or achievements expressed or implied by the
forward-looking statements. Such risks and other factors include, among others,
risks related to the anticipated business plans and timing of future activities
of the Company, including the Company’s exploration plans and the proposed
expenditures for exploration work thereon, the ability of the Company to obtain
sufficient financing to fund its business activities and plans, delays in
obtaining governmental and regulatory approvals (including of the Canadian
Securities Exchange) for the Earn-In Agreements and the Equity Transaction, the
risk that the Equity Transaction will not be completed or on the anticipated
timetable, the risk that Newcrest will not elect to obtain any additional
interest in the Projects in excess of the Minimum Commitment, the ability of
the Company to obtain the required permits, changes in laws, regulations and
policies affecting mining operations, the Company’s limited operating history,
currency fluctuations, title disputes or claims, environmental issues and
liabilities, as well as those factors discussed under the heading “Risk
Factors” in the Company’s prospectus dated May 26, 2021 and other filings
of the Company with the Canadian Securities Authorities, copies of which can be
found under the Company’s profile on the SEDAR website at www.sedar.com.
Readers are cautioned not to place undue reliance on
forward-looking statements. The Company undertakes no obligation to update any
of the forward-looking statements, except as otherwise required by law.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Sahyadri Times journalist was involved in the writing and production of this article.