Shannon Energy/Preussag explore Watson Lake bet

Calgary-based Shannon Energy has entered into a $1.5-million explora tion agreement with Preussag Canada on two groups of mining claims located at Watson Lake in the Matagami mining camp of Quebec.

Preussag holds exploration rights on the properties, which total 37 claims, and will be the operator. Exploration has already started with two drill rigs on site. The program will be comprised largely of diamond drilling followed by downhole pulse EM surveying.

Shannon is providing initial funding through a private placement with Vancouver-based First Exploration Fund (1986) for $500,000 by the issuance of flow- through treasury shares at $1.02 per share.

Preussag’s Watson Lake property is located about 2 km on strike with Noranda Inc.’s Mattagami Lake mine and about a half a kilometre west of Noranda’s mid-1985 Isle Dieu zinc/copper/silver discovery where hole 86-29 returned 104.8 ft grading 31.94% zinc, 1.08% copper and 2.92 oz silver per ton.

In 1983 Preussag optioned 27 of the claims from McIntyre Mines, who held and worked this main claim property following the Matagami Lake discovery boom. To date, Preussag has completed over $600,000 in exploration work.

Through exploration expenditures totalling $1 million, Preussag can earn either a 60% equity interest in a joint venture with McIntyre or, should McIntyre decline the joint venture, its interest will be reduced to a 20% net profits interest.

Shannon can earn 40% of Preussag’s interest by financing $500,000 in exploration expenditures prior to Dec 31 of this year, and a further $500,000 to be spent before Feb. 29, 1988.

The second group of 10 claims abutting the main group is owned outright by Preussag. Shannon may earn a 49% undivided interest in the claim group by funding $125,000 in exploration prior to June 30, 1987, and a further $375,000 by June 30, 1988.

Last month, Shannon entered into a $150,000 private placement with Paramount Funding (B.C.) Corp. and Resource Capital International to sell 200,000 treasury shares at 75 cents per share with a 1- year option on a further 200,000 shares at 75 cents per share.