Royalty trust considered by Franco Nevada Mining

A study has been commissioned by Franco Nevada Mining Corp. to determine the feasibility of placing the Goldstrike and Post claims located in the Carlin area of Nevada into a U.S. Royalty Trust, says President Pierre Lassonde.

A substantial portion of these units would be spun into the hands of Franco Nevada shareholders, he says.

This mechanism could eliminate taxation at the corporate level and place the bulk of the company’s gold royalty and net profit revenues directly into shareholders’ hands, he says.

Meanwhile, drilling has been done in a new area south of the Post discovery on the Goldstrike project. One hole, drilled in the centre of the Post deposit, encountered 390 ft of ore grading 0.193 oz gold per ton between 1,165 ft and 1,555 ft.

Other results include 0.106 oz gold per ton over 100 ft; 0.357 oz gold over 148 ft; and 0.292 oz gold over 80 ft.

When drilling on close space centres is completed, Mr Lassonde expects the current ore reserves to be materially upgraded.

Operator of the Goldstrike mine in which Franco Nevada has royalty and net profit interests is now American Barrick Resources after its acquisition of Western States Minerals and PanCana Minerals.

As a referendum has outlawed mining activity in the Californian county in which the company’s Lava Cap project was located, Franco Nevada has returned the property to its owners rather than make any further lease payments.

The return was effective Dec 31 and the cost of the project has written off the amount of $611,000 in the financial statements of the third quarter.

For the nine months ended Dec 31, Franco Nevada posted a deficit of $824,000 versus a deficit of $208,000 at the end of the same period last year. Working capital stands in excess of $3.3 million.