Santa Fe Pacific Gold (NYSE) can earn a 70% interest in the Golden Eagle deposit from Hecla Mining (NYSE).
To do so, the former must spend $7.5 million over three years exploring the deposit, which is situated in Washington state. It must also produce a feasibility study.
The company can withdraw from the project at any time after spending US$2.5 million.
The Golden Eagle is 1 mile northwest of Hecla’s Republic mine, which was exhausted earlier this year. A refractory gold deposit, the Golden Eagle has a resource of 11.3 million tons grading 0.1 oz. per ton.
Hecla discovered the deposit in 1988 while drilling for high-grade underground mineralization in the vicinity of the Republic. The deposit has been drilled on 300-ft. centres and is believed to have good exploration potential.
The Republic mill is not suited to handle this type of refractory ore, which consists of gold locked within pyrite and silica. However, Santa Fe has gained considerable experience with refractory ores from some of its operations in Nevada.
The company is building a proprietary flotation circuit at its Lone Tree operation in Nevada, and it expects gold recovery to be greater than 90%.
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