Agnico-Eagle bids for control of Vezza prospect

Toronto-based Agnico-Eagle Mines (TSE) has offered to buy 100% control of the Vezza gold project in northwestern Quebec from 50/50 partners Dundee-Palliser Resources (TSE) and North American Rare Metals (ME). Agnico currently has the right to earn a 51% stake in the project by spending $7.4 million on exploration and completing a feasibility study by 1994.

The Vezza property contains a deposit with reserves of 2.12 million tons grading 0.15 oz. gold per ton and is situated about 41 miles from Agnico’s Joutel milling complex. An underground program is scheduled to get under way soon.

Subject to regulatory approval, the recent deal will give Agnico the right to earn a 100% stake in the gold bet by making staged cash payments totalling $3 million, subject to a 15% net profits interest to Dundee and North American Rare.

The first $1 million is due on signing of the formal agreement, with another $250,000 due in 12 months and $750,000 due in two years. The final $1 million payment is due at the start of commercial production. Agnico also has the right to purchase two-thirds of the 15% net profits interest for $2.7 million.

Prior to signing the formal agreement, Dundee and North American plan to settle two other outstanding production royalties from the property which fall to third parties.