Calidus can earn 50% of the project from Toronto-listed Rugby Mining by spending A$700,000 on exploration within 42 months, and can move to 70% by spending an additional $500,000 and issuing $200,000 worth of shares.
Otways contains historical copper-gold prospects at Otways (Doherty) and Reedies, copper-lead-zinc mineralisation at Copper Gorge, and undrilled copper and gold anomalies at Malachite Flats.
Drilling at Otways in the 1960s returned 64m at 0.70% copper from 9.1m to end of hole; 48.8m at 0.62% copper from 6.1m to EOH; 27.4m at 0.72% copper from 24.4m to EOH; and 19.8m at 1% copper from 30.5m to EOH.
The holes were never analysed for gold, but subsequent rock chip and trench sampling returned grades of up to 13 grams per tonne gold along strike of the drilling.
Calidus managing director Dave Reeves said Otways, between Marble Bar and Nullagine, had strong exploration potential.
"As we move towards development of the Warrawoona gold project, we are looking to expand our Pilbara exploration potential to ensure a healthy pipeline of gold projects as both satellite deposits for Warrawoona and as potential standalone developments," he said.
"Otways offers substantial exploration upside, and its proximity to Warrawoona opens the door to a range of potential development scenarios.
"The tenements have some prior exploration with impressive initial copper intercepts but they have never been assayed for gold which remains our core focus. The project area has confirmed porphyry-style mineralisation outcropping at surface, and we believe the upside is substantial."
Calidus is completing a definitive feasibility study into Warrawoona, due in the September quarter, and is aiming to start construction in early 2021.
The 2019 prefeasibility study highlighted the potential for a 100,000 ounce per annum operation at all-in sustaining costs of $1159 an ounce.
"With the Warrawoona DFS set for completion in the coming quarter and drilling planned to start at the Otways project later this year, we are rapidly building a substantial asset base in the Pilbara of Western Australia," Reeves said.
Calidus shares have had a strong run this year after closing 2019 at 23c. The stock last traded at 39.5c, valuing the company at $85 million.
