BASE METALS — Inco and Fort Knox team up to explore for nickel in Labrador

Junior Fort Knox Gold Resources (FNX-T) will get a helping hand from its major shareholder, Inco (N-T), in its quest for Labrador properties prospective for Voisey’s Bay-type nickel-copper-cobalt deposits.

The companies’ so-called Nexsal agreement excludes Inco’s huge Voisey’s Bay nickel-copper-cobalt project in north-central Labrador and all other ground already held by Inco or its subsidiaries.

“Fort Knox is in the unique position of benefitting from Inco’s vast nickel technology and knowledge,” states Terrance MacGibbon, president of the junior company and former director of exploration at Inco. “The timing of the agreement is excellent [in that], in view of the current market conditions, many junior companies holding land in Labrador are not actively exploring their properties and are either dropping them or seeking to sell or option them to third parties. Over the past few years, many companies have completed high-quality geophysical, geochemical and geological surveys, and much of these data can now be obtained from government or industry files.”

The partners intend to concentrate on mafic intrusive rocks similar to those that host the Voisey’s Bay deposits. Plans call for data compilation and regional reconnaissance surveys in order to select targets for acquisition.

The “strategic alliance” will last three years and be funded and managed by both parties. Inco, as operator, will be responsible for compiling data and conducting fieldwork.

Fort Knox and Inco will form joint ventures on any properties acquired under the agreement, with the latter assuming operatorship of any exploration programs. Fort Knox will fund the first $3 million worth of exploration on any acquired properties and earn 100% of any acquired interest. The nickel giant will have the right to fund the next $10 million to earn 51% of Fort Knox’s interest, leaving the junior with a 49% stake. Subsequent expenditures will be funded on a pro-rata basis by both parties.

The evaluation team, consisting of members from both companies, has already begun reviewing several properties available for option or purchase.

Meanwhile, Fort Knox has launched exploration programs at the Canwell, Fish Lake and Rainy nickel projects in Alaska. Field crews and equipment were mobilized to the projects in mid-June and, following a 4-week geophysical program, diamond drilling is slated to begin.

The Alaska properties are held through an option agreement under which Fort Knox can earn up to a 45% interest from American Copper & Nickel, a wholly owned subsidiary of Inco’s U.S. division.