(MENAFN - ProactiveInvestors - Australia) Mungana Goldmines (ASX: MUX) has entered into a farm-in agreement with global gold producer AngloGold Ashanti (ASX: AGG, NYSE: AU, JSE: ANG) covering Mungana's Nyngan Gold Project in New South Wales.
AngloGold Ashanti has a market cap. of A534 million and produced 4.33 million ounces of gold in 2011 generating 6.6 billion in gold income, excluding joint ventures.
The company's most recent discovery is the 6.4 million ounce Tropicana Gold Mine in Western Australia.
The farm-in agreement, which is between AngloGold Ashanti Australia and Mungana's wholly owned subsidiary Nyngan Gold, relates to exploration licences EL7751 and EL7752 and exploration licence applications ELA4288 and ELA4479.
AngloGold will be the manager of the farm-in and has committed to a minimum expenditure of A500,000 in the first year, including at least 250,000 to be spent on geophysical surveys.
The company has the right to withdraw at any point after the minimum commitment is met.
AngloGold can earn up to a 70% interest in the project and form a joint venture by spending 4 million prior to 31 December 2017, after which Mungana can elect to contribute or dilute.
The joint venture project area is located near the township of Nyngan in New South Wales, where extensions of the Lachlan Fold Belt are concealed by younger cover.
These basement rocks are interpreted to correlate with the succession hosting Rio Tinto's (ASX: RIO) Northparkes deposit and Barrick Gold's (TSX: ABX, NYSE: ABX) Cowal porphyry gold/copper deposit to the south.
Due to the younger cover, limited exploration has been undertaken to date and detailed geophysical techniques will be required to better define interpreted porphyry targets prior to drilling.