Vancouver — Spokane-based
The 32-sq.-km property is adjacent to porphyry copper deposits owned by
The property also lies on a regional magnetic low connecting the Safford and Morenci camps. Phelps Dodge’s 85%-owned Morenci mine is the largest copper mine in the U.S.
Franconia can acquire all of Red Knoll by spending US$2 million on exploration over four years and reimbursing Teck Cominco’s land-holding costs for 2004. At least US$200,000 must be spent in the first year. The initial goal is to find porphyry-style copper mineralization buried beneath post-mineral volcanic cover. A geophysical program of magneto-telluric sounding followed by a reconnaissance induced-polarization survey is planned. Drilling will follow, if results warrant.
Once the first-year program is complete, Teck Cominco can back-in for a 70% interest by spending US$5 million. If it elects not to exercise the back-in option, it will be reduced to a 2% net smelter return royalty, which can be purchased by Franconia for US$1.5 million.
Once regulators approve the agreement, Franconia will have to issue 150,000 units valued at 40 apiece to Teck Cominco. A unit consists of 1.5 shares. This will give the major about 425,000 shares of Franconia.
The junior has other mineral projects in the U.S., including the Birch Lake platinum group metal property in the Duluth Complex of Minnesota and two high-grade zinc properties in Utah and New Mexico.
Ongoing drilling at Birch Lake is providing a “scoping-level” evaluation of the project’s potential. At last report, the project hosted an inferred resource of 51 million tonnes grading 0.67% copper, 0.21% nickel and 0.01% cobalt, plus 0.216 gram gold, 0.97 gram palladium and 0.46 gram platinum per tonne.
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