Coral and Amax Gold reach new agreement

A new agreement is in place that allows Amax Gold (NYSE) to continue to earn a 60% interest in Coral Gold’s (VSE) Robertson project.

The property lies within the Battle Mountain trend in Nevada’s Crescent Valley, adjacent to Placer Dome’s Pipeline deposits.

Under the terms of the new agreement, Amax must spend US$1 million on exploration and development over the next year and US$2 million each year thereafter until a production decision is made, based on a bankable feasibility study.

Amax is also required to make a payment of $250,000 in the first year and then $500,000 annually. Once a production decision is made, Coral can elect to have Amax fund all expenditures until commercial production is achieved in return for an additional 10% interest. Advances by Amax are to be repaid from 85% of the positive cash flow.

Over 60,000 ft. of combined reverse circulation and core drilling were completed in 1994 by Amax in over 160 holes on the Porphyry zone, just one of five known gold-bearing zones on the property.

Amax concentrated its efforts on the Porphyry because of its shallow lying nature and size, measuring roughly 2,200 ft. in length and up to 1,200 ft. in width.

A drill indicated resource is estimated at 20 million tons grading 0.036 oz. gold per ton. Although details of a feasibility study completed by Amax last November have not been released, Coral reports a proven and minable reserve of 260,000 oz. contained gold.

Exploration planned by Amax over the next year includes continued expansion of the Porphyry zone and testing of the higher grade 39A zone, where a resource is estimated at 4.7 million tons averaging 0.077 oz. gold.

In a separate agreement, Coral will retain over 200 of the southernmost claims that lie just to the north of Placer Dome’s Pipeline deposits. An exploration program is currently being planned by Coral and will include geophysics, soil sampling and trenching. Amax holds the right to back-in for a 51% interest by reimbursing Coral for double its exploration costs incurred on the claims.

Coral has approximately 18.5 million shares outstanding and a working capital of over $1 million.