Athabaska revises Ramrod agreement

A revised agreement between Athabaska Gold Resources (TSE) and Consolidated Ramrod Gold (TSE) has been approved by Royal Oak Mines (TSE).

Royal Oak, which owns 3.4 million shares of Athabaska, tried to block a previous deal between the two companies. It now has two nominees on Athabaska’s 4-member board of directors.

The new agreement gives Ramrod the right to earn up to 51% of the Damoti Lake property from Athabaska. It can do so by initially paying $100,000 and spending at least $300,000 on exploration.

On completion of the minimum work commitment, Ramrod may either drop out with no interest earned or spend a further $1.4 million to earn a 40% interest. It can earn a further 11% interest (to a total of 51%) by spending another $1 million.

The property, 150 km north of Yellowknife, N.W.T., is owned 75% by Athabaska and 25% by Covello Bryan & Associates, a Yellowknife-based engineering firm. Ramrod is earning the interest from Athabaska only; as a result, if Ramrod completes the full earn-in, the property will be split 51% to Ramrod, 24% to Athabaska and 25% to Covello.

Adding a further twist to the ownership, Gitennes Exploration (CDN) has reached an agreement with Covello to acquire its 25%. Details were not available at presstime, although the deal is reported to include payment of stock and cash over a 3-year period.

Gitennes President Jerry Blackwell expects the company to be listed on the Toronto Stock Exchange before year-end.

Blackwell said Gitennes (pronounced G-10s) was formed to explore for diamonds but he plans to steer the company toward gold and base metal prospects instead.

Interest in Damoti Lake was sparked by drilling earlier this year which returned a 9.5-metre intersection, from 50 to 59.5 metres, grading 13.7 grams gold per tonne. The intersection, which correlates with a steeply dipping surface showing, included a 5.9-metre section grading 20.5 grams gold. A review of the core indicates that the better gold values are associated with concentrations of pyrrhotite. Athabaska postulates that since pyrrhotite is the only magnetic mineral observed in the core, there is good potential in a 1-km-long magnetic anomaly which correlates with the intersection. Diamond drilling is expected to resume shortly.