Aurizon options Fayolle from Typhoon in Quebec

Gold producer Aurizon Mines (ARZ-T, AZK-X) is teaming up with Typhoon Exploration (TYP-V) in a joint-venture to explore Typhoon’s 100%-owned Fayolle gold project, 10 km north of Aurizon’s Joanna project in Quebec.

The Joanna project, about 20 km outside the town of Rouyn- Noranda, has a measured and indicated resource of 11.9 million tonnes grading 1.5 grams gold per tonne for 569,000 oz. gold and an inferred resource of 30.9 million tonnes at 1.4 grams gold for 1.35 million oz. gold.

The nearby Fayolle gold-rich-property covers 13.7 sq. km across the gold-rich Porcupine-Destor structural break in the Abitibi belt.

If Aurizon spends $10 million over four years it can earn a 50% interest in the project, subject to an underlying 2% net smelter return royalty.

Of that, $3.5 million must be committed to the project within two years.

Aurizon can then earn another 15% interest by completing a feasibility study or spending $15 million further on the project.

Once the initial 50% interest is earned, Aurizon will become the project’s operator.

In addition, Aurizon has the right over the first four years to subscribe for shares of Typhoon worth up to $500,000 on each anniversary of the option agreement.

The first subscription would consist of 609,756 units at a price of 82¢ apiece with each unit comprised of a share and a warrant. Each warrant entitles Aurizon to buy an additional share of Typhoon at $1.25 per share within 18 months following the closing.

Since launching exploration at Fayolle in 2003, Typhoon has spent about $10 million on the project.

Mineralized zones on the deposit are found along a major shear corridor of about 2.5 km by 1 km, marked by carbonate alteration and local gold enrichment associated with finely disseminated pyrite.

The grade is quite variable inside the corridor, from 0.1 gram gold anomalies to concentrations of up to 100 grams gold in individual drilling samples.

The mineralization remains open at depth.

Drilling will focus on two goals: extending the known Fayolle deposit resource outline down dip; and generating and testing other targets using already defined geological controls.

So far, Typhoon has delineated inferred resources of 113,000 oz. gold down to 100 metres grading 1.6 grams gold using a cutoff grade of 0.5 gram gold. Higher grade intervals in the range of 10 to 40 grams gold over 3 to 30 metres also have been found during previous drilling, Aurizon says.

At presstime in Toronto, Typhoon’s shares were 66¢, trading within a 52-week of 9.5¢-$1.07.

Aurizon’s shares were $5.12, and its 52-week range is $3.63-$5.98 per share.

Typhoon has 12.97 million shares outstanding and Aurizon has 159.2 million.