Headwater signs Crane Creek earn-in deal with Centerra

Executive Summary

• Headwater Gold Inc. has entered into a definitive earn-in agreement with a subsidiary of Centerra Gold Inc. to explore the Crane Creek Gold Project in Idaho.
• Centerra can earn up to a 70% interest in the project through staged exploration expenditures totaling up to $25 million USD and the completion of a Preliminary Economic Assessment (PEA).
• The agreement includes an initial cash payment of $87,000 USD, annual payments of $50,000 USD, and specific milestones for drilling and resource definition.

Key Details

• Transaction Structure: Centerra earns up to 70% interest via three stages of exploration expenditures and technical deliverables.
• Initial Payments: Centerra pays an initial cash payment of $87,000 USD upon execution and annual cash payments of $50,000 USD thereafter, starting on the first anniversary. These are considered exploration expenditures.
• Stage 1 (51% Interest): Centerra may acquire a 51% interest by sole-financing $10 million USD in exploration expenditures within four years. This includes a firm commitment to finance a minimum of $2.5 million USD in exploration within the first three years. Centerra becomes the initial operator.
• Stage 2 (60% Interest): Centerra may earn an additional 9% interest (totaling 60%) by sole-financing an additional $15 million USD in expenditures within four years following Stage 1 completion.
  • Royalty Trigger: Upon completion of Stage 2, Headwater cedes a 2% Net Smelter Return (NSR) royalty on royalty-free claims and a 1% NSR royalty on land subject to existing underlying royalties.
• Stage 3 (70% Interest): Centerra may earn an additional 10% interest (totaling 70%) by completing a PEA report reflecting a mineral resource of not less than one million ounces gold equivalent within two years following Stage 2.
  • Extension: Centerra can extend the Stage 3 period via annual payments or incremental exploration expenditures.
• Fallback Provision: If Centerra completes Stage 1 but not Stage 2, its ownership reduces to 49%, which Headwater has the right to purchase at a mutually agreed price or fair value.
• Project Status: The Crane Creek 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.
• Exploration Plan: Partners intend to finalize an integrated exploration plan incorporating recent geophysical data (magnetic, radiometric, gravity) and historical results. Phase 1 drilling is targeted for as early as spring 2026.
• Project Geology: Located in western Idaho, the project features an array of mineralized epithermal quartz veins within a broad gold and trace element geochemical anomaly. It is located 8 km along trend northwest of the Nutmeg Mountain gold project.

Notable Quotes

• Caleb Stroup, Headwater's President and CEO: "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."