Western Australian gold producer Pantoro Gold (ASX:PNR) announced a partnership with private firm Mega Resources.
The agreement focuses on the high-grade Rama Open Pit, situated within the Forrestania Region of Western Australia.
Under the terms of the deal, Pantoro will provide an upfront funding facility of up to $20 million to Mega Resources.
The funds are specifically earmarked to discharge existing debts and accelerate the development of Stage 2 of the Rama Open Pit, with the loan secured by a first-ranking interest over the project tenure.
The financial structure of the deal ensures a rapid capital recovery for Pantoro, with the advance to be recouped from gold delivery revenue at a rate of $1,000 per ounce.
Mega Resources is expected to deliver approximately 115,000 tonnes of ore at an impressive grade of 4.7 g/t Au.
Pantoro will take charge of batch processing the ore at its Norseman Gold Project, paying Mega between 70% and 80% of the reconciled value based on ore grade.
Beyond the immediate open-pit operations, the partnership holds substantial long-term value through an exclusive 12-month option for Pantoro to develop a high-grade underground mine beneath the current pit.
Managing Director Paul Cmrlec highlighted that replacing low-grade stockpiles with this high-grade material will strengthen margins.