Initially, Crowflight can take a half-stake in the Bucko resource, plus a 25% interest in the Bucko/ Bowden, Halfway Lake and Resting Lake claims, by spending $18 million over three years.
Of that, $7.5 million must be spent on the Bucko resource (including completion of a bankable feasibility study) and $10.5 million on the exploration properties.
Crowflight can acquire the Bucko resource outright by making a production decision and securing financing. The company can also boost its stake in the other properties to 50% by spending an additional $7 million on exploration.
Crowflight will act as operator of the Bucko resource, with Falco managing the exploration claims.
For the balance pf the year, Crowflight is required to spend $1.25 million on the Bucko resource, $500,000 on the Bucko/ Bowden property, and $750,000 on the Halfway Lake and Resting Lake properties. Crowflight director Stan Bharti says the company has enough cash on hand to cover its commitment of $2.5 million by the end of November.
“We’re in no panic to raise additional capital, especially at a share price of thirty cents,” says Bharti. “Our plan is to spend some money in Thompson and add some value. Then, at the right time, we’ll do some additional financings.”
Most of the capital raised by the company will be via flow-through financing.
The deal also calls for Crowflight to issue Falconbridge 2 million shares and 5 million warrants; half of the warrants are exercisable at 35 per share for two years, with the remaining half exercisable at 75 for two years. Thereafter, Crowflight would issue Falco another 1 million shares in June of each of the subsequent four years.
“We’re excited about the opportunity Falconbridge has given us on the Thompson camp,” says Bharti. “The base metal business is a big boy’s game; it’s much more difficult for juniors. This gives Crowflight the potential to become a significant base metal producer.”
The agreement has yet to be approved by regulators.
In 1992, Falco pegged the Bucko block global resource at 19 million tonnes grading 1% nickel, included in which was a higher-grade core of 2.5 million tonnes grading 2.23% nickel and 0.17% copper. The zone of high-grade disseminated and massive-sulphide mineralization dips at about 70 and reaches 70 ft. across at its widest point. The resource also includes some copper, cobalt and platinum group element (PGE) credits. Crowflight says the estimate does not conform to National Instrument 43-101 standards.
The property is also home to a 300-metre deep shaft, from which some exploration drifting has been completed.
An internal economic evaluation by Falconbridge in 1994 concluded that a combined open-pit and underground operation was capable of producing 14,550 tonnes of nickel and 800 tonnes of copper per year over eight years. The scheme would generate a rate of return of 15%, based on a nickel price of US$4.13-4.38 per lb.
A second study, by Micon International in 2001, considered an underground operation focused on the higher-grade zone. Annual production was estimated at 5,700 tonnes nickel and 360 tonnes copper. The study employed a nickel price of US$3 per lb. and a copper price of US80 per lb., and yielded a rate of return of 41% over an 8-year mine life.
For the balance of the year, and into 2005, Crowflight plans to compile all available data into a three-dimensional model of the known mineralization. Drilling to define the size and grade of the open-pit and underground resource is planned in anticipation of a 43-101-compliant resource report and estimate.
The company will also carry out additional metallurgical and geotechnical work, and investigate the content and distribution of platinum group elements. A feasibility study will be launched later this year.
The associated exploration properties cover some 190 sq. km in the Wabowden segment of the nickel belt, and are situated 100 km south of
At the Bucko/Bowden property, Crowflight intends to compile all data in anticipation of completing a 43-101 report. In 1967, Falco pegged the property’s resource at 97 million tonnes grading 0.63% nickel. The company’s plans include three-dimensional modelling ahead of 19,000 metres worth of diamond drilling in 2004 and 2005.
At Halfway Lake and Resting Lake, Falco will carry out an airborne electromagnetic survey and follow-up ground geophysics to outline targets for a 6,000-metre drill program in early 2005.
Meanwhile, on the wholly owned AER-Kidd property, in the Sudbury Basin, Crowflight is testing two large magnetotelluric geophysical anomalies with three holes measuring between 1 and 2.2 km in length. The holes are designed to test the anomalies at vertical depths between 800 and 1,500 metres below Perch Lake on the eastern portion of the property.
So far, Crowflight has drilled 2,000 metres of the planned 3,700 metres. Initial results indicate the presence of disseminated pyrrhotite and chalcopyrite in the hangingwall sediments above the Worthington Offset dyke. Such intersections were uncommon in previous drilling, southwest of the lake.
Crowflight says the latest deal with Falconbridge does not affect its plans at AER Kidd, though it has shown the major some data from the property. The company expects to wrap up drilling by the end of July, with results to follow soon thereafter.
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