Hammerdown deal amended — Battle Mountain relinquishes back-end rights for shares

Battle Mountain Gold (BMG-N) is relinquishing its back-in right to the Hammerdown gold project in western Newfoundland in exchange for 50,000 shares of owner Major General Resources (MGJ-V).

The amendment, which has yet to be approved by regulators, would allow Major General to conclude a deal with McWatters Mining (MCW-T). In June, the two signed a letter-of-intent whereby McWatters can earn a half-interest in the property by, among other conditions, paying $1 million in cash and stock and completing a bankable feasibility study within a year of the deal’s ratification.

The Hammerdown property contains the Hammerdown and Rumbullion deposits, which, combined, host 614,400 tonnes grading 18.01 grams gold per tonne. In 1995, an independent feasibility study concluded that both deposits could be mined by underground mining methods at the daily rate of 400 tonnes. On an annual basis, the project would yield an average of 49,000 oz. gold over five years, and cash costs are projected at US$150 per oz. (These projections are based on a gold price of US$385 per oz., which prevailed at the time of the feasibility study.)

Preliminary metallurgical tests on drill core recovered between 94% and 97% of the gold. Plans call for a 2,000-tonne bulk sample to be extracted so that these results can be confirmed.

In addition to Hammerdown and Rumbullion, the property contains the Orion gold and Lochinvar polymetallic zones. Resources for the former are pegged at 291,000 tonnes grading 8.65 grams gold, based on results from 28 widely spaced drill holes. Drilling in the Lochinvar zone has returned up to 8.4 metres of 6.57% zinc, 0.8% copper, 1.44% lead, 49.6 grams silver and 0.3 gram gold.