Typhoon Exploration signs option agreement for Fayolle

Gold producer Aurizon Mines (ARZ-T, AZK-X) is teaming up with Typhoon Exploration (TYP-V) in a joint-venture to explore the latter’s 100%-owned Fayolle project, 10 km north of Aurizon’s Joanna project in Quebec.

Aurizon’s Joanna project, about 20 km outside the town of Rouyn-Noranda, has a measured and indicated resource of 11.9 million tonnes grading 1.5 grams gold for 569,000 oz. gold and an inferred resource of 30.9 million tonnes at 1.4 grams gold for 1.35 million oz.

Typhoon’s nearby Fayolle property covers about 1,373 hectares across the Porcupine-Destor Break in the Abitibi Belt. This fault or its subsidiaries is directly associated with several gold deposits including the Kerr-Addison, Hollinger, McIntyre, Dome, Glimmer, Holt-McDermott and Hawker-Holloway mines in Ontario as well as the Osisko and Beattie mines in Quebec.

If Aurizon spends $10 million over four years it can earn a 50% interest in the project subject to an underlying 2% net smelter royalty. Of that, $3.5 million must be committed to the project within two years.

Aurizon can then earn another 15% interest for a total of 65% by completing a feasibility study or spending an additional $15 million on the project. Once the initial 50% interest is earned, Aurizon will become the project’s operator.

In addition, Aurizon has the right over the first four years to subscribe for shares of Typhoon up to $500,000 on each anniversary of the option agreement.

The first subscription would consist of 609,756 units at a price of 82¢ apiece with each unit made up of a share and a warrant. Each warrant entitles Aurizon to buy an additional share of Typhoon at $1.25 per share for a period of 18 months following the closing.

Since launching exploration at Fayolle in 2003, Typhoon has spent about $10 million on the project.

Mineralized zones on the Fayolle deposit are found along a major shear corridor of about 2.5 km by 1 km, marked by carbonate alteration and local gold enrichment associated with finely disseminated pyrite.

The grade is variable inside the corridor, from 0.1 gram gold per tonne anomalies to concentrations of up to 100 grams gold per tonne in individual drilling samples. Down dip, the mineralization remains open at depth.

Drilling will concentrate on two targets: extend the known Fayolle deposit resource outline down dip; and generate and test other targets using already defined geological controls.

So far Typhoon has delineated inferred resources of 113,000 oz. gold down to 100 metres at a grade of 1.6 grams gold per tonne using a cut off grade of 0.5 gram gold per tonne. Higher grade intervals in the range of 10 to 40 grams gold over 3 to 30 metres also have been encountered during previous drilling, Aurizon says.

At presstime in Toronto Typhoon was trading at 66¢ per share and over the last year has traded in a range of 9.5¢-$1.07 per share. Aurizon was trading at $5.12 per share and its 52-week range is $3.63-5.98 per share.

Typhoon has 12.97 million shares outstanding and Aurizon has 159.2 million.