Pelangio takes over Detour Lake properties

As mining winds down at Detour Lake, 200 km north of Timmins, Ont., Pelangio-Larder Mines (PLLM-C) has moved to assemble the dominant land position in the area by buying up the Placer Dome (PDG-T) properties surrounding the mine.

Pelangio is acquiring the major’s exploration interests in the 70-sq.-km land package for $1 million, plus 250,000 treasury shares and warrants to purchase another quarter-million Pelangio shares at 75 cents each. Placer retains a 1% net smelter return royalty (NSR).

Placer will hold on to the mine property, dealing Pelangio an option to buy it for $400,000 once mining and reclamation are complete. In return for the option, Placer gets $100,000 cash and 250,000 shares, plus warrants on another 250,000 shares and a 1% net smelter return. The warrants in both deals expire in three years, and Pelangio can buy out Placer’s NSRs for a further $1 million each.

At mid-year, Detour had reserves of 1.5 million tonnes grading 3.6 grams gold per tonne, plus a 2.6-million-tonne resource, not included in mine reserves, that grades 6 grams per tonne. Mining is scheduled to wind down in the middle of 1999.

Placer is releasing all its geological information to Pelangio, and the junior will have access to unused areas on the Detour Lake property while mining and reclamation work are ongoing.

Placer’s interests include 65% of the Fault Lake property, which adjoins the Detour property’s western boundary, the wholly-owned DN property, and the Border property, where Placer has the right to earn a 40% interest.

Pelangio is raising the cash by entering into a joint venture with Franco-Nevada Mining (FN-T). The royalty company is kicking in $1.3 million for cash payments and up-front costs, and $1 million in initial exploration expenditures. Franco-Nevada and Pelangio each have a 50% interest in the joint venture, which Pelangio can maintain by matching Franco-Nevada’s expenditures over the first five years of work, up to a maximum of $1 million.

Franco-Nevada’s approach to exploration here will be similar to its approach in the Kirkland Lake area, where it is teamed with another junior, Queenston Mining (QMI-T). Pelangio, like Queenston, will operate the exploration program with funding from Franco-Nevada.