A formal agreement to acquire 29 unpatented mining claims in Humboldt Cty., Nev., was recently signed by partners International Mahogany (TSE) and North Lily Mines (NASDAQ).
The companies will purchase the claims from owners Win-Eldrich Mines (TSE) for US$100,000 in cash plus US$5,000 per month for a period of 18 months. From the nineteenth month on, a 3-5% royalty is payable to Win-Eldrich. Mahogany and North Lily will have earned a 100% interest in the property’s precious metals rights and a 72% interest in its base metal rights after making payments totalling US$1 million.
To date, about US$8 million has been spent on the property, which covers an area measuring about 5,640 acres.
Based on drilling to date of more than 68,000 ft. in 65 holes, preliminary reserves are estimated to be 1.1 million tons grading 0.12 oz. gold per ton. The gold reserves are hosted in a series of quartz veins running roughly parallel to the ground surface. The mineralization remains open-ended on strike as well as to depth.
Adjacent to and below the gold-bearing veins, a molybdenum deposit is estimated to contain in excess of 700,000 tons at an average grade of about 1.4% molybdenum.
The companies expect to begin an infill drilling program in September to confirm gold reserves. Preliminary testing indicates the gold reserve could be economically recovered using open pit heap leaching.
The joint venture also plans to study the viability of constructing a separate molybdenum recovery plant.
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