Torq Resources has proposed a joint venture agreement with Gold Fields to advance the Santa Cecilia copper-gold project in Chile.
The non-binding term sheet between Torq and Gold Fields’ affiliate outlines a two-stage option for Gold Fields to acquire up to a 75% interest in the project, with a total investment of $48m over a maximum of six years.
The Santa Cecilia Project, spanning 3,250 hectares, is situated in a significant mining region near Copiapo.
The definitive option agreement is expected to be finalised for Torq's shareholder approval in November 2024.
However, the agreement is contingent upon Gold Fields completing its due diligence, which is currently in progress.
Gold Fields currently holds a 15.5% stake in Torq.
The transaction is subject to TSX Venture Exchange acceptance.
Under the initial option in the term sheet, Gold Fields can earn a 51% stake by funding $18m within the first 30 months. This includes a minimum commitment of $6m to get a 10% initial interest.
Gold Fields can then opt to invest an additional $12m to increase its stake to 51%. If Gold Fields decides not to pursue the Stage 1 (initial) option, Torq can buy back the initial interest for $6m within 48 months.
Following the Stage 1 option, Gold Fields can opt to invest another $30m for an additional 24% interest, extending the option period to six years.
If Gold Fields does not fulfil the Stage 2 option, it will retain a 51% interest and may make cash payments to Torq in exchange of Stage 1 or 2 project spending commitments.
A JV will be established upon Gold Fields earning a 10% interest or deciding not to proceed with the Stage 1 or Stage 2 options.
The JV will include provisions for management, budget approvals, dilution policies and a cap on net smelter royalties at $20m for diluted interests below 10%.
Torq will remain the project operator until Gold Fields secures a 51% interest.
Minvisory is acting as Torq's financial advisor, with McMillan as legal advisors. Gold Fields' legal counsel is Fasken Martineau DuMoulin.
