Teck takes option on Fleck’s platinum bet

In a move that could bring its Marathon, Ont., platinum group metals (PGM) deposit to a production decision as early as late next year, Fleck Resources has signed a letter of intent with Teck Corp. involving a 4-stage plan of action.

“It’s a tremendous deal,” says John McGoran, president of Fleck, “and one with which I’m very pleased.”

For Teck, a company with interests in gold, coal, copper and zinc, this letter agreement is a step into further diversification. As John May, president of Teck Exploration tells The Northern Miner, the company has been looking at platinum for the last two years.

The salient points of the letter of intent are:

_Teck has agreed to complete a preliminary assessment of the economic viability, including a reserve study of the property by Oct 31.

_Teck has also agreed to complete a preliminary pit design and mining schedule by Nov 15.

_Upon completing the above and providing that, in Teck’s opinion, the results are favorable, Teck will then complete its own formal feasibility study on the property on or before Sept 30, 1987.

_Within six months of completing this feasibility study, provided the property is economic, Teck may then make a commitment to place the property into production, thus earning a 100% interest in the property, subject to a 50% net profits interest to Fleck.

_If the feasibility study is positive, Teck would be responsible for production financing. Teck is also the operator throughout.

Bamoos transfer

Also included in the deal is the transfer of a mineral lease from a Teck- controlled company called Bamoos Minerals to Fleck. The 535-acre Bamoos lease adjoins Fleck’s Marathon property to the north and east.

If the Fleck project goes ahead to production the Bamoos lease would be desirable for the location of the plant site and waste and tailings disposal as well as the ultimate extension of the north pit, says Teck.

If, after Oct 31, Teck elects to proceed to the formal feasibility study, the Bamoos lease would be vended into the agreement as part of its contribution to the project and this interest would become part of the Fleck property.

In consideration of such a transfer, Fleck will grant an option to Teck to acquire 250,000 common shares of Fleck at a price of $4 per share to be exercised on or before Dec 31, 1987. This would give Teck a 6.8% interest in the company.

As mentioned in its recent annual report, Fleck had been expecting to receive a final feasibility study on the deposit from Toronto-based Kilborn Engineering this past summer. However, with the signing of the letter of intent, Teck will now receive all of Kilborn’s data and “go through it in minute detail,” explains Mr McGoran. Property acquired year ago

Fleck acquired the property in the Hemlo area about a year ago when Atlantic Richfield sold off the mining assets of Anaconda Minerals Explorations, a newly-formed affiliate of Anaconda Canada. In the late 1960s Anaconda placed drill- indicated reserves at 34.4 million tons of 0.039-oz-per-ton platinum/ palladium and 0.47% copper with additional values of gold, silver, rhodium, nickel and cobalt.

Since acquiring the property, Fleck has completed fill-in diamond drilling, re-assaying of drill core rejects, bulk sampling and metallurgical testwork. As a result, Fleck has increased the mineral inventory to 47 million tons of 0.07- oz-per-ton platinum/ palladium and 0.45% copper.

Metullurgical testing of the deposit recently completed by Lakefield Research indicated 84.5% and 87.7% recovery for platinum and palladium, respectively, and a 85% recovery rate for copper.

Fleck has spent approximately $1 million on the project so far, not including the $500,000 spent in acquiring the property, says Mr McGoran.

It is still too early to say how much Teck will be spending to bring the project to the production decision stage, says Mr May, emphasizing the company is just now involved in the preliminary assessment stage. $100 million to develop mine

Should a production decision be made, it would cost an estimated $100 million to develop the mine, says Mr McGoran. “That size of investment is not beyond Teck’s capability,” notes Mr May.

Indeed for the nine months ended June 30, Teck reported a net income of $16.8 million on revenues of $141 million, compared with $10.8 million on revenues of $161 million in the year-earlier period. At the end of the latest 9-month period Teck ‘s working capital stood at $74 million compared with $23 million a year earlier.

The letter of intent will be set out in a formal agreement which both parties intend to have completed within 30 days. The transaction is subject to the approval of the Vancouver Stock Exchange.