Northgate buys 20% stake in Holmer Gold Mines Ltd.

Northgate Exploration of Toronto (TSE) has acquired 680,000 shares of Holmer Gold Mines Limited (ASE), which represents approximately 20% of the total shares outstanding for consideration of 60,000 Northgate shares.

The investment represents an initial position and the company may increase its position, Northgate says. Northgate has also entered into a private placement agreement to acquire 300,000 flow-though common shares from Holmer at $1.00 per share.

Under the agreement, Northgate has an option to acquire an additional 300,000 non flow-through common shares at $1.15 per share until December 31, 1990.

The agreement gives Northgate a fully-diluted 32% interest in the company.

Chevron Canada Resources has undertaken a major exploration program on Holmer’s Bristol Township gold property, southwest of Timmins, and can earn a 50% interest by spending $2.2 million over a four-year period.

Recent drilling has returned a number of intersections with significant gold values including 0.278 oz gold-per-ton over 25.3 ft, 0.24 oz over 18.1 feet and 0.338 oz over 11.1 feet.

Under a joint venture agreement with Campbell Resources, Holmer can earn a 50% interest in the Quebec Chibougamau mine, a former producer which is adjacent to two producing properties.