Partners up stakes in Manantial Espejo

Junior Silver Standard (SSO-V) has acquired Barrick Gold‘s (ABX-T) 20% interest in the Manantial Espejo silver-gold project in southern Argentina.

Silver Standard issued 400,000 common shares to Barrick in exchange for the interest.

Barrick has agreed to defer the payment of a royalty of US$5 per oz. gold and US6 per oz. silver until commercial production is achieved. The royalties were previously due on completion of a final feasibility study. Barrick also retains a 3% royalty on gold and silver resources discovered on certain other claims.

At last report, Manantial Espejo’s measured and indicated resources stood at 4.39 million tonnes grading 263.8 grams silver and 4.51 grams gold per tonne. Inferred resources stand at 1.59 million tonnes grading 258.2 grams silver and 3.65 grams gold. Measured and indicated resources represent 73% of the total resource.

The company expects to shortly close a deal with Black Hawk Mining (BHK-T) under which Black Hawk would acquire half of Silver Standard’s 20% interest in Manantial Espejo in return for a 40% direct interest in the Sulphurets-Bruceside gold-silver project in British Columbia.

As part of the deal, Silver Standard would pay Black Hawk $125,000 in cash and a net smelter return royalty of 1.2% on production in excess of the resources of silver and gold already outlined on the property.

After the deal, Black Hawk will hold a 90% interest in Manantial Espejo. Silver Standard will hold the remaining 10% and an option to earn a further 40% from Black Hawk by paying US$1.5 million in cash (this is already paid) and spending US$4.5 million on exploration by 2002 (this is extendible to 2003 under certain conditions).

The underlying vendors retain two royalties, one of which is tied to production but cannot exceed $600,000. The other is a 0.5% net smelter return.

To date, US$17 million has been spent at Manantial Espejo. Silver Standard is operator of the project and plans a minimum of 5,000 metres of diamond drilling later this year.