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Headwater Gold (CSE: HWG)(OTC: HWAUF) CEO Caleb Stroup on $25 Million Exploration JV with Centerra Gold
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Headwater Gold (CSE: HWG)(OTC: HWAUF), Mr. Caleb Stroup. Caleb, great to have you back on. Seems like every time we chat, I am congratulating you. This time I'm congratulating you for the new agreement with Centerra Gold, signing a $25 million, and I should state that's in US dollars, Earn-In Agreement to explore the Crane Creek Gold Project in Idaho. Great work, sir. I would love for you to share the details. Starting to lose track about the potential exploration expenditures. I know it's well north of 125 million if every project received the partner funded commitments that they saw all the way through between the three major partners that you have now, but great work here with Centerra.
Caleb Stroup: Yeah, no, I really appreciate it. We're very happy with this one. Centerra has been a very supportive shareholder just over a year ago they built a strategic 9.9% equity position in Headwater at the corporate level. And now this is a great transition to also bring them in as a partner on one of our projects to directly advance exploration. And as you said, yeah, this is one of many of these sorts of deals. Now, I guess this is our sixth partner funded project and earning agreements with big producing companies. The three projects we announced a couple of months ago with OceanaGold, and then the two we have been working on with Newmont for the last couple of years. So rounds out really the portfolio of partner funded exploration and allows us to continue to scale our business here.
Gerardo Del Real: Well, listen, I really, really love the way that the deal is structured. Look, it's good for both companies, but as a headwater shareholder and someone that covers the company in one of the published letters on the publishing side, even if you see the 25 million in expenditures to fruition, it's not like you just get defaulted to a 2% royalty or something. You still would retain 30% of that project, correct?
Caleb Stroup: Yeah. Well, actually, I can walk through the details a little bit.
Gerardo Del Real: Absolutely.
Caleb Stroup: It's a stage deal like all of ours. There's a stage one, which is a $10 million US exploration spend to get an initial 51% interest in the project. Two and a half million US of that 10 is actually a firm commitment that they have to spend or pay us a difference in cash. So that's the stage one component. And then the stage two is what brings up to 25, which is an additional $15 million expenditure commitment to get from 51 to 60% actually in the project itself. So at that point, they'll have spent 25 million US for a 60% interest, but we also are granted a royalty at the end of that stage two, which is a 2% NSR on the majority of the ground that has no underlying burden, royalty burden, and 1% NSR on certain inlier pieces that have a small royalty burden already existing.
So it's really, at the end of that stage two, we retain 40% interest plus the royalty component after them spending 25 million US. And then the stage three to get them from 60% to 70% requires the completion of a PEA with a resource of greater than a million ounces. So they'll continue to do whatever drilling is necessary to find that resource and we're carried to that point so we don't have to contribute capital alongside of them until that PEA is published.
Gerardo Del Real: No, look, it's fantastic work. There's going to be a lot of drilling going on in 2026. Can you set the table for me here as we get closer to the end of the year, because you are going to be even busier if that's possible.
Caleb Stroup: Yeah. Well, it feels like I'm pretty busy now. We still have a couple of drill programs underway right now. Drilling is still underway at our TJ project in partnership with Oceana. It's underway at the Lodestar Project in partnership with Newmont. Both of those programs will wrap up here hopefully before the holiday season. And then we're kind of putting together the chess board for 2026, but there's now a lot of pieces on the board. This new agreement with Centerra, it's still not totally finalized. We just announced it hours ago, but the intention is to get to work on there and get drilling pretty early on in 2026. There's two more OceanaGold funded projects that are on the list for drilling in 2026. And then probably the biggest in terms of meters will be the big follow-up program at the Spring Peak discovery with Newmont. That's the one that is marching through the Fast 41 permitting process with the federal government to get that permit we've been working towards so we can mount a big effort down at spring peak in 2026 as well. So lots to look forward to for sure.
Gerardo Del Real: Lots of shots on goal. It's going to be, I think a 2026 of discoveries for the team. Great work. Caleb, thank you so much for the time.
Caleb Stroup: Yeah, thank you.
Gerardo Del Real: All right. Chat soon. Cheers.
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