Aurizon Mines eyes Casa Berardi gold project in Quebec

Vancouver-based Aurizon Mines (ARZ-T) has signed a letter-of-intent with TVX Gold (TVX-T) and Golden Knight Resources (GKR-T) to acquire the suspended Casa Berardi underground gold mine in northwestern Quebec.

Aurizon will pay the owners $3 million in cash upon signing a definitive deal, followed by a further $5 million on the resumption of commercial production or at the end of three years, whichever comes first. Subsequent payments will be made in the form of a 2-to-4% gold-indexed net smelter return royalty, payable up to a maximum of $10 million.

Closure of the deal is subject to the outcome of an ongoing due diligence review, board and regulatory approval, and Aurizon’s completion of an equity financing.

In 1996, Casa Berardi produced 76,040 oz. gold from two nearby mines, known as the East and the West. Production, however, was suspended earlier this year on the basis of continuing operating losses and the need to drill and develop existing reserves (T.N.M, Jan. 13/97). Aurizon says it will tackle the second problem by launching a major exploration program, including a minimum of 50,000 metres of diamond drilling.

If the deal is ratified, Aurizon will also acquire 14,000 ha of ground surrounding the mine, as well as the 2,200-tonne-per-day mill, hoist, headframe and underground mining equipment.