EXPLORATION – GeoNova, Inmet revise Chevrier deal

GeoNova Explorations (GNE-M) and Inmet Mining (IMN-T) have reworked a 1995 agreement which provided the former with an option to acquire the latter’s Chevrier gold project near Chibougamau, Que.

Under the revised deal, GeoNova’s obligation to produce a feasibility study on the project has been extended to Dec. 31, 2001, allowing GeoNova and its partner, Arca Explorations (ACX-M), more time for definition and exploration drilling.

The revision also requires that two blocks of 200,000 GeoNova shares be issued to Inmet on Sept. 1, 1999, and Sept. 1, 2000. In addition, GeoNova has the right to buy back half of the 2% net smelter royalty that Inmet would obtain if it decided not to participate in future development after reviewing a feasibility study. This right can be exercised by paying Inmet $1 million within 12 months following the beginning of commercial production.

These modifications have also changed an agreement reached in September between GeoNova and Arca regarding the Chevrier project: Arca will now issue treasury shares to GeoNova equivalent to 50% of the market value of the shares that GeoNova issues to Inmet.

In September, Arca agreed to acquire half of GeoNova’s rights to the Chevrier project by spending $3.8 million on exploration over five years. In addition, operator GeoNova has committed to spend another $1 million on exploration by Sept. 1, 2001. Of this total, $2.5 million must be spent by next September.

Situated along the Fancamp fault, about 35 km southeast of Chibougamau, the Chevrier project consists of five claim blocks that contain two promising gold-bearing zones — Chevrier and South Chevrier.

At Chevrier, resources are pegged at 3.6 million tonnes grading 5.1 grams gold per tonne using a 3 gram cutoff. The zone extends for more than 1 km and to a depth of at least 575 metres.

The South Chevrier zone, 1 km southwest of Chevrier, displays gold-bearing structures similar to Chevrier. Inmet drilled 13 holes into South Chevrier during 1992-94 and delineated an anomalous zone wider than 100 metres, with higher-grade intersections varying from 5 to 25 grams gold over 1.5-4.4 metres.

GeoNova’s sister company, MSV Resources (MSV-T), spun off Arca a year ago in order to focus on its Copper Rand 5000 project. At that time, Arca shares were distributed as a dividend to MSV shareholders on the basis of one Arca share for every 10 MSV shares. Arca shares began trading on the Montreal Exchange in July, and Raymond Savoie, a former Quebec mines minister, has been installed as Arca’s president.

Meanwhile in the Chapais region near Chibougamau, Arca has optioned its 9-claim Fenton-Firstake gold property to Boreal Exploration (BOR-M).

Boreal can acquire a 51% interest in the property by spending $100,000 on exploration over three years. Arca will retain the remaining interest and an option to acquire 100,000 Boreal shares at 50 cents each over three years.

The agreement allows Boreal to strengthen its position at its adjacent Fenton project, where resources are pegged at 360,000 tonnes grading 4.94 grams gold per tonne.