River Gold Mines (TSE) will mine the Edwards gold deposit northeast of Wawa, Ont., and owner VenCan Gold will retain a carried interest.
The former has budgeted $3 million for underground development, with work scheduled to start this summer. Under a sub-lease agreement, VenCan will receive a $500,000 payment upon closing, against a royalty of $5 per ton on the first 100,000 tons mined. It will get $3 per ton for any additional ore mined. The companies will share revenue equally after River Gold’s costs of development, mining and milling are deducted.
The deposit, with probable gross reserves of 434,000 tons grading 0.48 oz. gold per ton, will send ore to River Gold’s leased Magnacon mill, west of Wawa, which is processing ore from River Gold’s Eagle River mine. The Edwards operation is expected to produce 15,000-20,000 oz. gold yearly.
The lease deal is scheduled to close Mar. 15, following due diligence and regulatory approval.
VenCan has taken an option on the Plowman property, immediately east, and along strike, of the Edwards mineralized shear. For $200,000, the company can buy an outright interest in the property, where drilling is scheduled for late February.
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