A letter of agreement with North Pacific Mining, an Alaskan native corporation, gives USMX (NASDAQ) the right to further explore and develop the Illinois Creek gold-silver property in the interior of Alaska.
USMX must make a cash payment of US$50,000, plus a further US$4 million in common shares if it proceeds with development and production. North Pacific retains a 25% working interest which is convertible into a 5% net smelter return royalty.
Previous work on the project outlined a drill-indicated geologic resource of 6.35 million tons grading 0.070 oz. gold and 1.5 oz. silver per ton, based on a 0.02 oz. cutoff for gold.
The total includes a preliminary mining resource of 3.88 million tons grading 0.088 oz. gold and 1.7 oz. silver.
USMX reports that engineering and metallurgical studies completed to date indicate the deposit is amenable to conventional open-pit, heap-leach mining with recoveries in the 85% range.
The company plans to begin a program of core drilling as well as metallurgical and feasibility work to test the project’s viability. If the work proves positive, USMX estimates production could start as early as mid-1996 at an annual rate of about 50,000 oz. gold.
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