Hemlo transfers stake in Rendell-Jackman project

Toronto-based Hemlo Gold Mines (TSE) has agreed in principle to assign its 50% interest in the Rendell-Jackman gold project in Newfoundland to Major General Resources (TSE), owner of the remaining interest.

Under the proposal, Hemlo Gold is retaining a 3% net smelter return royalty on precious metals and 1% net smelter return on base metals. The Toronto company can also reacquire a 50% interest by cancelling the production royalty and, depending on circumstances, either reimbursing Major General for double its expenditures or spending a similar amount on exploration. As the deal requires Major General, a Vancouver-based junior, to spend $600,000 on exploration and development by the end of 1993, the company is currently looking at ways to finance further work on the property. With reserves standing at about 400,0000 tons of grade 0.37 oz. gold per ton, Rendell-Jackman is one of a basket of gold properties sold to Hemlo Gold by Noranda (TSE), when the latter elected to concentrate on base metals. Recently potential investors were bidding 27 cents for the Major General stock while holders were asking 33 cents. About 30% of the 6.5 million shares outstanding are controlled by Chairman Richard Atkinson and a U.S. associate.