Queenstake moves forward at Jerritt Canyon

Vancouver — Queenstake Resources (QRL-T) has signed a purchase agreement with subsidiaries of AngloGold (AU-N) and Meridian Gold (MDG-N) to acquire a 70% and 30% stake in Nevada’s Jerritt Canyon mine.

The price tag comes includes $250,000 already paid by Queenstake, plus another $1.25 million due on closing the deal. Additional cash payments totaling $6 million are scheduled, as well as the issuance of 32 million Queenstake shares. The deal also includes some $4 million in future royalty payments.

The acquisition remains subject to regulatory and shareholder approval, which will be sought at the company’s annual general meeting slated for June 16.

The bid is Queenstake’s second try at acquire the mine. In April, its first bid failed after the parties were unable to reach a financial settlement.

Jerritt Canyon holds four operating underground mines, a 1.5 million ton per year mill and approximately 100 sq. miles of land. Jerritt Canyon has been in continuous operation since 1980 and has produced in excess of 6 million oz. of gold. At December 25, 2002, Jerritt Canyon had proven and probable reserves of 2.5 million tons grading 0.24 oz per ton, for 581,000 contained oz of gold. The project also contains a measured and indicated resource of 5 million tons grading 0.26 oz gold.