McFinley Red Lake Mines (TSE) expects to solve some of its recent troubles by optioning its 30-claim Bateman Twp. gold project near Red Lake, Ont., to Placer Dome (TSE).
The two companies have signed a letter of intent giving Placer Dome the option to earn a 60% stake in the property by spending $2 million on exploration and paying $240,000 to McFinley.
Under the proposed agreement, Placer Dome would also pay Winnipeg contractor Dominion Bridge $100,000 initially, plus a further $1 million if and when a production decision is made.
McFinley has been at odds with Dominion Bridge since the contractor constructed a 100-ton-per-day mill on the Bateman Twp. property in 1988. Claiming that it had been left with an over-rotating ball mill, McFinley didn’t pay the bill and Dominion Bridge filed a lien on the property. As a result, any agreement between McFinley and Placer Dome is subject to approval by Dominion Bridge.
If the deal goes ahead, McFinley would retain a 40% participating interest or convert to a 15% net proceeds interest while remaining responsible for paying any existing royalties. Under the agreement, Placer Dome would also have an option to purchase the mill and other surface facilities.
The dispute with Dominion Bridge has prevented McFinley from bulk sampling about 15,000 tons of material needed to determine the viability of the project.
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