Abacus buys Afton back-in rights

A formal agreement with Teck Cominco (TEK.SV.B-T, TCKBF-O) allows Abacus Mining & Exploration (AME-V, ABCFF-O) to acquire mining-related facilities and infrastructure near the past-producing Afton copper-gold mine near Kamloops, B.C.

Abacus is exploring several properties in the region, notably the Rainbow and DM/Audra properties. The company has been active in the historic mining camp since 2001, when it acquired properties from Teck Cominco. The major retained back-in rights for up to a 65% interest under certain conditions, including the start of a feasibility study.

The newly inked agreement allows Abacus to acquire the back-in rights, along with mine-related surface rights, facilities, infrastructure and equipment, and associated permits. The company will satisfy the purchase price of $28.5 million by issuing 18.5 million shares and paying $10 million cash to Teck Cominco in stages.

Teck Cominco will retain a 1.5% net smelter royalty covering each of the Rainbow and DM/Audra properties, which Abacus can acquire for $3 million per property.

A predecessor of Teck Cominco operated the Afton open-pit mine from 1978 to 1987. Several satellite pits were subsequently developed, which allowed mining to continue on an intermittent basis in the 1990s. After mining ceased in 1997, portions of the mill were dismantled and sold to other operations.

Abacus is currently drilling its Ajax, Rainbow and DM claims to define copper-gold mineralization beneath the previously mined Ajax pits, as well as deeper targets on the Rainbow and DM zones. About 7,500 metres of drilling are expected to be completed before year-end, with the goal of bringing the project to prefeasibility next year.

At last report, the Rainbow zone hosted an indicated resource of 47.1 million tonnes grading 0.34% copper and 0.084 gram gold per tonne, plus an inferred resource of 3 million tonnes at 0.24% copper and 0.064 gram gold, based on a 0.2% copper cutoff grade.

DM/Audra hosts a drill-indicated resource of 28.5 million tonnes grading 0.29% copper and 0.15 gram gold, plus an inferred resource of 15.8 million tonnes grading 0.28% copper and 0.12 gram gold, at the same copper cutoff grade.

Also active in the camp is New Gold (NGD-T, NGD-X), which is carrying out an underground infill drilling program to upgrade resources at its wholly owned New Afton project. Results will be incorporated into a feasibility study scheduled for completion next year.

New Gold is looking to develop a new underground mine below and adjacent to the Afton open pit. A previous scoping estimated measured and indicated resources of 68.7 million tonnes grading 1.08% copper, 0.85 gram gold per tonne, 2.62 grams silver and 0.12 gram palladium (also calculated as 1.68% copper-equivalent, or 2.61 grams gold-equivalent). Of this total, 9.5 million tonnes were classified as measured, while the indicated resource was 59.2 million tonnes.