Madison signs up Placer Dome to explore Buracao gold property

An option agreement has been finalized, giving Placer Dome (TSE) the right to earn a 63% interest in the 18,000-hectare Buracao gold property in Tocantins state, Brazil.

The deal requires Placer to spend US$5 million on the property over three and a half years and make option payments totalling US$375,000.

On vesting, Consolidated Madison Holdings (VSE) will have a 21% interest, the original vendors will have a 16% interest, and Placer will hold the balance.

The original vendors can convert their interest to a royalty, which would give Placer a 75% working interest and Madison a 25% interest.

Placer has already paid out US$100,000, with the balance of US$275,000 payable to Madison.

Gold production on the Buracao property dates back to the 1700s. Independent miners are currently working oxidized zones around four open pits and a number of underground workings.

Gold mineralization is hosted in sulphide-bearing quartz veins and banded sulphide quartz zones.

Gold production in 1993 averaged about 30 kg (965 oz.) per month, and head grades for the current operations range from 2 to 30 grams gold per tonne.

Placer’s initial phase of work is under way. It will include sampling programs on the existing pits and underground workings in an effort to identify targets for drilling in the new year.

Consolidated Madison, which holds interests in a number of other properties in Brazil and Venezuela, has about 10.4 million shares outstanding and $250,000 in working capital.