Fort Knox eyes Sudbury (May 15, 2001)

Vancouver — With exploration for platinum group metals heating up in northern Ontario, Fort Knox Gold Resources (FNX-T) has teamed up with mining contractor Dynatec (DY-T) to make a proposal to acquire five of Inco’s (N-T) advanced properties in the Sudbury Basin.

Inco has accepted the proposal as a basis for negotiation.

Under the proposal, Fort Knox would get a 75% interest in exploring, developing and mining the prospective properties. Dynatec would receive a 25% stake. In return, the newly formed joint venture would:

• fund future exploration and development expenditures;
• implement an underground rehabilitation program;
• initiate an aggressive mine capital expenditure and production schedule;
• issue Fort Knox shares to Inco;
• pay Inco a net smelter royalty;
• grant to Inco a one-time buy-back right to acquire a controlling interest in any ore deposits discovered that would meet Inco’s size and production criteria; and
• process production from the properties at Inco’s smelting facilities.

The properties are located around the margin of the Sudbury Basin, within 40 km of Sudbury. They host the past-producing McCreedy West, Levack, Victoria, and Kirkwood mines, as well as the Norman North copper-nickel-platinum-palladium mineralized zones. They are owned 100% by Inco. They are inactive and are considered non-core to Inco’s Sudbury operations.

Fort Knox has entered into a letter of intent with Dundee Securities concerning the financing of a possible deal. Details of the financing will be announced when the terms are settled. Dynatec plans to fund its share of expenditures from funds in hand.

The exclusive negotiations may be cancelled by mutual consent, or if satisfactory progress has not been made by Dec. 31.