Aurizon reworks Casa Berardi payment (July 06, 2001)

TVX Gold (TVX-T) has agreed to grant Aurizon Mines (ARZ-T) a two-year extension (to August 2003) for the payment of $4 million related to the acquisition of the Casa Berardi gold property in northwestern Quebec.

In return, Aurizon will issue 1 million shares to TVX, plus additional shares on a quarterly basis to cover interest on the outstanding payment at 10% per annum. The interest payments will be secured by a lien on the buildings, machinery and equipment at Casa Berardi.

The reworked deal is subject to regulatory approval and completion of final documentation.

As per the original agreement, TVX retains a gold-indexed net smelter return royalty, ranging from 2% to 4% to a maximum of $10 million.

The Casa Berardi property is situated in the Abitibi region of Quebec and covers about 140 sq. km along a 43-km stretch of the Casa Berardi fault. The property includes a 2,200-tonne-per-day mill, hoist, headframe and underground equipment.

Previous mining operations were performed from ramps that accessed the upper part of the deposits at the East and West Mines. A total of 3.7 million tonnes, at an average gold grade of 6.7 grams per tonne, were extracted between 1988 and 1997 to produce 688,000 oz. gold.

The West Mine area of the property hosts minable gold reserves of 1.5 million oz. contained in 6.9 million tonnes grading 6.7 grams gold per tonne. This is equal to the average mine grade of the 650,000 oz. previously produced from the property.

The property also contains undiluted mineral resources totalling 4.5 million tonnes grading 7.7 grams gold.

A feasibility study was completed by Aurizon on the West Mine area. It envisages annual gold production of more than 200,000 oz. at an estimated average cash cost of US$145 per oz. The mine’s lifespan is pegged at 7.5 years. Capital costs are estimated at $121 million.

At the West Mine, zones 113 and 118, which were discovered as the result of a 76,500-metre drill program completed by Aurizon, are still open to depth. The deepest holes returned grades of 26.2 grams gold per tonne over 4.2 metres at zone 113 and 26.4 grams per tonne gold over 10.9 metres at zone 118.

The company is looking for funding for follow-up drilling to test extensions of the zones and other targets.