Athabaska in option deal for Ladner Creek mine

Toronto-listed Athabaska Gold Resources (TSE) can acquire the assets of the Ladner Creek gold mine near Hope, B.C.

The assets include a 1,500-ton-per-day gold processing mill and a tailings pond. Underground workings, installed at an estimated cost of $40 million, allow accessibility to an estimated 1 million tons grading 0.13 oz. gold per ton. Also included is a large block of claims in the same geological setting that hosts the known deposits.

The former producer operated from January, 1982, to September, 1984, during which time it yielded 881,000 tons grading 0.094 oz. The mine closed as a result of problems associated with dilution, mill recovery and environmental control.

Athabaska plans an aggressive exploration program to increase reserves prior to reactivating the mill. Underground drilling is to begin before year-end. In the first year of the option, the company must spend $1 million on the project and give the vendor 125,000 free-trading shares of Athabaska, plus warrants. The warrants will enable the purchase of 1 million shares at $1.20 each in the first year (or $1.50 each during the second year if the option is continued). Upon completion of the obligations, Athabaska may withdraw from the option with no claim to the assets, or exercise its option to acquire them by issuing to the owners: 2.4 million shares if the share price is $2.50 or higher; 4 million shares if the price is $1.50 or lower; or shares equivalent to $6 million if the price is between $1.50 and $2.50. The option may be extended for a second year by spending an additional $1 million on the project and providing an additional 125,000 free-trading shares. It may be extended for a third and a fourth year by again spending $1 million in each of the years.