Thermal farms out claims in diamond play to Kennecott (May 25, 1992)

Thermal Exploration (ASE) has reached an agreement with a syndicate led by geologists Terry Heard and Mike Duggan to acquire a 70% interest in 97,000 acres near the Lac de Gras, N.W.T., diamond discovery.

The claims are about 40 miles north of the area where Dia Met Minerals (VSE) and BHP-Utah Mines recovered 81 small diamonds within a kimberlite pipe. They are also on the same Archean geological trend as the Dia Met discovery at latitude 65 and longitude 109.

Having agreed to pay the syndicate 50 cents per acre plus 200,000 common shares, Thermal has also decided to farm the property out to the Canadian affiliate of Utah gold miner Kennecott. Under the farm-out agreement, Kennecott can earn 70% from Thermal by reimbursing the junior for the 50 cents per acre acquisition cost and by financing all exploration completed before a production decision.

If a production decision is reached, Thermal can earn a 21% working interest in the joint venture or revert to a 4% overriding royalty.

While exploration is expected to resume this summer, Thermal’s primary focus remains the 50% owned Williams Creek copper oxide project near Carmacks, Yukon, where 11.6 million tons of 1.08% copper and 0.01 oz. gold per ton have been outlined. Thermal’s partner at Williams Creek is Teck (TSE) affiliate Western Copper Holdings (VSE).

Queenston Mining (TSE) of Toronto recently agreed to buy a 30.5% interest in Thermal by purchasing 3.5 million shares at 35 cents each.