El Nino options Bathurst projects from Falconbridge

Vancouver — El Nino Ventures (ELN-V, ELNOF-O) is blowing into New Brunswick’s Bathurst base metal camp by optioning a large land package from area producer Falconbridge (FAL-T, FAL-N).

The deal has El Nino able to earn up to a 50% interest in almost 1,100 sq. km, including permitted areas, by spending $5 million over two years. Once its interest reaches 50%, El Nino will have 90 days to select specific project areas in which it would be able increase its interest up to 75% with additional staged spending of up to $5 million over five years.

Falconbridge retains a back-in right to regain up to a 70% interest in stages. It can boost its stake from the 25% or 35% level to 50% by contributing 250% of El Nino’s spending. The major can then acquire a 70% interest by completing a feasibility study or spending an additional $20 million on the specific project. Falconbridge retains the right to process all ore from any future operation.

The major will act as project operator with El Nino funding the planned program of deep penetrating geophysics to delineate drill targets. The joint venture plans about 24,000 metres of core drilling in about 34 holes during the first year’s program.

Falconbridge’s Brunswick mine has operated for over four decades and currently produces about 265,000 tonnes (585 million lbs.) zinc, 75,000 tonnes (166 million lbs.) lead, 5,900 tonnes (13 million lbs.) copper and 5.9 million oz. of silver dor annually. Mineralization consists of very fine-grained sphalerite, galena, pyrite and chalcopyrite contained in several volcanogenic massive sulphide (VMS) lenses. The district has undergone a number of significant deformation events and is intensely folded and faulted.

At its 10,000-tonne-per-day operating rate, Brunswick is approaching exhaustion of its ore within about four years. Proven and probable reserves at Brunswick stand at 14.7 million tonnes grading 8.8% zinc, 3.5% lead, 0.36% copper and 104 grams silver per tonne. Additional measured and indicated resources add another 3.5 million tonnes of 9.4% zinc, 3.8% lead, 0.32% copper and 98 grams silver.

Falconbridge also operates a smelter in the area that processes the lead concentrates. Zinc concentrates are shipped to its CEZ refinery near Montreal, and copper concentrates are sent to the Horne smelter in Rouyn-Noranda, Que., for refining.

To fund its earn-in commitments, El Nino plans up to a $7-million private placement consisting of 8.75 million units at 80 apiece.

The junior posts a $9.7-million market capitalization based on its 10.2 million shares outstanding and recent 52-week-high trading price of 95.