Vancouver —
The Sudbury Basin joint venture, held 75% by Fort Knox and 25% by Dynatec, paves the way for a $14-million exploration program over the McCreedy West, Levack, Victoria, Kirkwood and Norman properties. Fort Knox picked up the projects from
Under the Inco deal, Fort Knox is required to pony-up $14 million in exploration expenses within 16 months. The company can earn a 100% interest in the properties, as well as the right to lease all the surface land and on-site facilities. In return, the junior must spend $30 million by the end of 2005 and has agreed to boost Inco’s stake in the company to 20%.
Inco can re-acquire a 51% interest in any new discovery that contains mineral resources with a value of at least 600 million lbs. of nickel by spending 200% of Fort Knox’s costs on the new deposit. The major would also be granted the right to process the minerals and, in the event of third-party processing, retain a 2% net smelter return royalty for nickel, copper and cobalt plus a 2.5-5% NSR for precious metals. Inco also retains a right of first refusal on the sale of any of the properties.
The agreement assigns all of Fort Knox’s obligations and interests in the properties to the joint venture. Fort Knox will conduct all surface and underground exploration, with Dynatec taking on surface and underground mining operations. The partners will share costs equally on the first $14 million spent, whereas the remaining $16-million requirement will be funded on a pro rata basis, with Dynatec contributing 25%, or $4 million, and Fort Knox contributing 75%, or $12 million.
“Fort Knox is pleased to have Dynatec, one of Canada’s premier mining contracting and service companies, as its joint-venture partner,” says the former’s president, Terry MacGibbon. “With Dynatec on board, we will be able, if warranted, to put the properties into production with minimum capital and mine the properties with low operating costs.”
Says Robert Dengler, Dynatec’s chief executive officer: “The participation and interest to be earned in these Sudbury Basin joint-venture properties is significant to Dynatec’s corporate growth strategy, and we are excited about working with Fort Knox.”
The properties are all former copper, nickel, platinum, palladium and gold producers and contain numerous remnants and extensions of previously mined deposits. The initial $14-million work program, now under way, comprises at least 80,000 metres of surface drilling. Underground drilling on the McCreedy West and Levack properties is planned for later in the year.
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