Under a memorandum of understanding, Lonmin would be granted an option to acquire an initial half-interest in the Muskox joint venture by spending $18.8 million on exploration over four years.
Lonmin could then boost its stake by 10% by funding a feasibility study on any or all of the joint venture’s prospects. The company could earn an additional 5% interest by arranging financing for up to $500 million, then earn up to a further 5% by arranging $80 million in financing for each 1% increment.
There will be no further dilution if development expenditures exceed $900 million.
The agreement proposes that Lonmin subscribe to a private placement of 1.2 million Muskox units priced at $1 each, concurrent with the joint-venture agreement. Each unit would consist of one share and one purchase warrant entitling Lonmin to buy another share for $2 until four years from closing.
The private placement, excluding exercise of the warrants, would give Lonmin 3.75% of Muskox’s outstanding shares on a fully diluted basis.
Situated 500 km north of Yellowknife, the targetted intrusion is exposed as an elongated north-trending series of mafic-to-ultramafic rocks. Funnel-shaped in cross-section, it dips gently to the north; is 15 km wide in the north, narrowing to 600 metres in the south; is exposed for a strike length of 50 km; and continues beneath cover to the north for another 40 km.
The Muskox project comprises the entire intrusion, including its extension beneath cover to the north. With these dimensions, it ranks as one of the largest known layered mafic-ultramafic intrusions in the world. Muskox Minerals compares it to those that host the Bushveld platinum-palladium deposits in South Africa and the Voisey’s Bay nickel-copper-cobalt deposit in Newfoundland.
The junior began exploring the intrusion in 1995, and by 1997 it had acquired the rights to the entire intrusive complex.
Earlier this summer, the first four holes drilled on the Keel-2 geophysical target returned low-grade values. Highlights came from hole 35, which cut a 7-metre-thick zone of disseminated sulphides at a down-hole depth of 136 metres and a 21-metre-thick semi-massive sulphide zone at 316 metres.
Results include:
– 0.9% copper and 0.26% nickel, plus 1.1 grams palladium and 0.12 gram platinum, over 3 metres from 312 metres down-hole;
– 0.99% copper, 0.3% nickel, 1 gram palladium and 0.18 gram platinum over 4.5 metres from 317 metres down-hole; and
– 1.28% copper, 0.45% nickel, 1.2 grams palladium, 0.18 gram platinum over 15 metres from 323 metres down-hole.
Drilling on the Keel-1 West geophysical anomaly returned similar results. Lonmin produces 1.3 million oz. platinum group metals annually from the Bushveld igneous complex in South Africa.
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