Atlas Minerals (ATMR-O) has a 120-day option period in which to decide whether on not to acquire Western Gold Resources, a private Florida-based company.
To do so, Atlas would exchange 1.2 of its own shares for each Western Gold shares. Also under the deal, Atlas would fork over $150,000 in cash. Western Gold has about 11.6 million shares outstanding.
Key to the deal for Atlas is Western Gold’s Estrades polymetallic mine about 200 km northwest of Val d’Or, Quebec.
The mine complex last saw action in 1992, before being shut down due to depressed metal prices and high contract mining and toll milling costs.
A 1989 independent feasibility study at Estrades identified proven and probable reserves of 953,700 tonnes grading 5.6 grams gold, 183 grams silver per tonne, plus 0.96% copper, 0.92% lead and 10.69% zinc. About 162,000 tonnes of the reserves were mined and returned grades slightly exceeding those predicted by the feasibility study.
To be completed by SRK Consulting, the due diligence study will seek to confirm and bring the reported tonnages and grades in line with current standards. The study will also aim to update costs and other economic parameters.
Preliminary operating plans call for mining at a rate of 700 tonnes per day to produce both copper and zinc concentrates. The company is also looking at the feasibility of building a mill on site.
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