The term sheet is to buy a 72.3% stake in Kalia Holdings, a PNG-registered company which holds contractual rights to explore for minerals and develop mines in the Tinputz District of north Bougainville.
Kalia holds a 75% stake in the Tore project, which covers about 1800sq.km in joint venture with landowner organisation Toremana.
"The transaction with Kalia seeks to ensure GB is ready to explore in Bougainville if and when exploration licences are granted," GB said.
The Australian company will loan Kalia $A600,000 for an exclusive 120-day option to purchase the 72.3% stake from Kalia shareholders , with Kalia to spend the money on development of its Bougainville assets.
Should GB choose to exercise the option, it will carry out a placement to raise $1.6 million, with the company to also issue 250 million adviser options if the capital raising is made at an issue price of 0.8c per share.
If the option is not exercised, Kalia will be obligated to repay the loan.
Shares in GB spiked 25% in early trade yesterday before settling to its opening price of 0.8c at midday, giving it a market capitalisation of $7.5 million.