Echo Bay acquires stake in Fairmile

Gold producer Echo Bay Mines (eco-x) is expected to gain an 8% interest in Fairmile Gold (fla-a), which has an option to acquire the Buffalo Valley gold project in northern Nevada.

Echo Bay will acquire 700,000 units priced at US$2 each. A unit consists of one Fairmile share and two warrants exchangeable for additional shares. Each “A” warrant gives the major the opportunity to buy one Fairmile share for US$3 within a 12-month period, whereas the “B” warrant allows the company to buy a share within 24 months at a price of US$4.

Echo Bay has also agreed to fund a bankable feasibility study at a cost of up to US$5.5 million. Depending on whether the warrants are optioned, Echo Bay can buy a 65% interest in the project for US$14 million, including US$25 per recoverable ounce on its share of the first 420,000 oz.

Should it exercise all its warrants, Echo Bay would own 8%, or 2.1 million shares, of Fairmile.

In February, Fairmile began a 30,000-ft. drill program on the 8,200-acre property, which straddles Lander and Humboldt Ctys. The program is designed to test 14 targets with 50 holes. The company hopes to expand mineralization on the A-B-O area, which has a current resource of 17.2 million tons grading 0.03 oz. gold per ton, equivalent to 522,000 contained ounces.

Echo Bay’s McCoy-Cove gold mine is 12 miles from the Buffalo Valley property.