Nuinsco to buy Bucko Lake

Following a 13-hole drill program, Nuinsco Resources (NWI-T) has decided to enter into an option to buy Falconbridge’s (FL-T) Bucko Lake property in the Thompson nickel belt, 100 km south of Thompson, Man.

During its due-diligence study, Nuinsco drilled 4,627 metres, confirming a high-grade nickel resource over mining widths and the upward extension of the nickel mineralization.

Roscoe Postle Associates also completed a mineral inventory, which indicated 2 million tonnes grading 2.27% nickel, including dilution of 20% at wallrock grade. Metallurgical tests by Inco (N-T) and Lakefield Research suggest that Bucko Lake’s ore-grade material is amenable to treatment at Inco’s concentrator at Thompson.

A feasibility study has been initiated and independent consultants are compiling capital and operating cost estimates to bring the mine into production. An environmental permit application has been submitted to the Manitoba government.

During the due-diligence period, Nuinsco spent $850,000 and issued 100,000 treasury shares, including the purchase of net smelter return royalties, totalling 2.3%, held by two independent parties.

Nuinsco plans to spend $5 million to dewater the 340-metre shaft and begin underground delineation drilling, drifting and ore-sampling, in preparation for full-scale production. Nuinsco intends to ship ore directly to Thompson or Sudbury for custom milling.

Under the deal, Nuinsco must spend $3 million on exploration and development over five years. On signing of the option, Nuinsco must issue to Falconbridge either 50,000 shares or options to purchase 100,000 shares, plus warrants to purchase another 100,000 shares. This transaction must be repeated for each of the next four years. The options will be priced at the market price on issuance and the warrants will be exercisable at $1.50-$2.50. Both will be exercisable over three years.

Nuinsco can also earn a 49% interest in the Strong Lake and Moak properties, adjacent to the Mel Deposit and the Mel claims, by spending $2.5 million over five years. Falconbridge has those properties under option from Inco. Nuinsco has already paid $100,000 and a program of ground geophysics has returned encouraging results. Nuinsco must spend a further $200,000 in 2000. This will fund more geophysics and drilling.