Anaconda eyes Pine Cove (May 07, 2003)

Anaconda Gold (ANX-V) has inked a deal to acquire up to a 60% stake in New Island Resources‘ (NIS-V) Pine Cove gold project, near Baie Verte, Nfld.

New Island Resources is based in St. John’s, Nfld.

Toronto-based Anaconda can acquire an initial 30% interest by spending $500,000 before the end of 2004. Anaconda’s stake will be boosted to 60% after it arranges project financing and project cash flow has repaid all capital costs. The deal also calls for Anaconda to issue 250,000 shares to New Island.

The deal has yet to be approved by regulators. Anaconda is also responsible for a $30,000 payment within 90 days of signing.

“The acquisition of this interest in Pine Cove provides Anaconda with an advanced-stage gold project, one that has the potential to become an attractive gold mine in a relatively short period,” says Anaconda Chairman John Cook.

Anaconda’s plans to review all project data in anticipation of a new feasibility study. The company will also test for extensions to Pine Cove’s known gold zones.

A 1993 feasibility study pegged Pine Cove’s minable, diluted reserves at 1.9 million tonnes grading 3.2 grams gold per tonne. Anaconda notes that the reserve figure is not in line with Canadian standards under National Instrument 43-101. In 1996, NovaGold Resources (NRI-T) updated the study and pegged the project’s open-pit reserve at 2.6 million tonnes running 2.8 grams gold (or around 234,000 oz. contained gold).

In late 2001, New Island acquired from Novagold the 70% interest in Pine Cove it didn’t already own. The purchase price was 1 million shares at a quarter apiece.