Headwater Gold signs Crane Creek earn-in agreement with Centerra Gold, Idaho

Headwater Gold Inc. [CSE: HWG; OTC: HWAUF] has entered into a definitive earn-in agreement with a subsidiary of Centerra Gold Inc. for Centerra to earn up to a 70% interest in Headwater’s Crane Creek project in Idaho through staged exploration expenditures totalling up to US$25 million and the completion of a preliminary economic assessment (PEA) report.

Highlights: Headwater has entered into a definitive earn-in agreement with Centerra for a subsidiary of Centerra to earn up to a 70% interest in Headwater’s Crane Creek project in Idaho; up to US$25 million in staged earn-in expenditures. Centerra may elect to earn up to a 60% interest in the project by financing exploration expenditures of US$25 million and granting Headwater a royalty on the project; Centerra to finance a minimum commitment of US$2.5 million in exploration expenditures during the first three years of the agreement.

Carried interest to completion of a PEA: Centerra may earn an additional 10% interest (up to 70% in the project by completing a preliminary economic assessment report on the project.

The project is fully permitted for drilling under a notice of intent with the Bureau of Land Management (BLM) and a plan of operation with the Idaho Department of Lands.

Caleb Stroup, Headwater’s president and CEO, stated: “Since becoming a strategic Headwater shareholder last year, Centerra has been an engaged and supportive partner. We are very excited to expand that relationship into a fully aligned exploration partnership on the project level at Crane Creek. Centerra’s commitment to a substantial multistage earn-in underscores the scale of the opportunity at this project and allows us to properly test what we believe is a large, underexplored epithermal system with high-grade potential at depth as well as near surface, bulk-tonnage potential. Centerra brings strong technical expertise and a collaborative approach and we look forward to working with them to unlock the full potential of the project for our shareholders.”

Commercial terms: The agreement grants Centerra the exclusive right to acquire up to a 70% interest in the project, subject to the terms thereof, by making an initial cash payment of US$87,000 to Headwater upon execution of the agreement and subsequent annual cash payments of US$50,000 thereafter starting on the first anniversary of the agreement. These payments are considered exploration expenditures for the purposes of the earn-in structure outlined below.

Stage 1: Centerra has the option to acquire a 51% interest in the project by sole financing exploration expenditures of US$10 million within four years of the execution date. Stage 1 includes a firm commitment to finance a minimum of $2.5 million in exploration within the first three years. Centerra will be the initial operator of the project.

Stage 2: Centerra may elect to earn an additional 9% interest (to 60% in the project by solely financing additional expenditures of US$15 million within four years following the completion of Stage 1. Headwater will be ceded a 2% NSR royalty on royalty-free claims that are 100%-owned by Headwater and a 1% NSR royalty on land subject to existing underlying royalties.

Stage 3: Centerra may earn an additional 10% interest (to 70%) in the project by completing a preliminary economic assessment report for the project, which is required to include a minimum one-million-ounce gold or gold equivalent resource, within two years following completion of Stage 2. Centerra can extend the Stage 3 earn-in period by making annual payments to Headwater or making incremental exploration expenditures.

The Crane Creek project is located in western Idaho, approximately 18 km northeast of the town of Weiser and 90 km northwest of the city of Boise, with a paved county road less than one km from the southern property boundary.

The project is fully permitted for drilling under a notice of intent with the BLM and a plan of operation with the Idaho Department of Lands. The project encompasses an array of mineralized epithermal quartz veins within a broad gold and trace element geochemical anomaly and features characteristics of a well-preserved low-sulphidation system, including historical mercury workings, widespread opaline silica and chalcedonic vein fill. This alteration cell is located eight kilometres along trend northwest of the Nutmeg Mountain gold project (1,006,000 ounces gold indicated and 275,000 ounces gold inferred). The Crane Creek project comprises approximately 1,240 hectares, consisting of 123 unpatented federal mining claims on BLM land, a 640-acre State of Idaho minerals lease and a private lease.

Historic drilling took place on the property between 1984 and 1996, consisting of mainly shallow reverse circulation holes with an average depth of 71 metres.

Headwater recently completed airborne magnetic and radiometric surveys and a ground gravity survey across the property, which collectively delineate a large, structurally focused hydrothermal system extending well beyond the area of historical work. The radiometric data define a 4-km-by-2 km potassium anomaly interpreted as illite-adularia alteration, while the magnetic and gravity data sets highlight a series of untested north-northwest-trending structural breaks and magnetite-destructive lows consistent with prospective fault-hosted vein zones. Integration of these data sets with surface mapping and historical results has defined multiple high-priority targets for both high-grade vein mineralization at depth and near-surface bulk-tonnage potential.

Under the earn-in agreement, Headwater and Centerra will now work jointly to finalize an integrated exploration plan that incorporates the recently completed geophysical data sets, historical results and updated geological interpretation. The partners intend to prioritize and refine specific drill targets across the main vein corridor and newly generated structural and alteration targets, with the objective of initiating phase 1 drilling as early as the spring of 2026.

Centerra Gold is focused on operating, developing, exploring and acquiring gold and copper properties in North America, Turkey and other markets worldwide. Centerra operates two mines: the Mount Milligan mine in British Columbia, Canada, and the Oksut mine in Turkey. Centerra also owns the Kemess project in British Columbia, Canada, and the Goldfield project in Nevada, United States, and owns and operates the molybdenum business unit in the United States and Canada. Centerra holds a 9.9% equity interest in Headwater Gold.

Headwater is part of the NewQuest Capital Group, which is a discovery-driven investment enterprise that builds value through the incubation and financing of mineral projects and companies.