Aurizon signs LOI with Radisson for gold property with high-grade past

Aurizon Mines (ARZ-T, AZK-X) is considering a joint venture with Radisson Mining (RDS-V) for the O’Brien-Kewagama property, home to the past-producing high-grade O’Brien gold mine, in the Abitibi gold belt between Val d’Or and Rouyn-Noranda, Que.

Aurizon has signed a letter of intent, giving it 60 days to consider the proposed arrangement for an option to earn up to 50% in the property.

To earn the first 25%, Aurizon would have to spend $5 million on exploration or make up the difference in cash payments to Radisson within a two-year period.

After that, Aurizon would have another two years to complete a pre-feasibility study on the property to earn a total 50%-interest in the property.

Once the prefeasibility study has been completed, Aurizon would have 60 days to go ahead with and fund a bankable feasibility study.

Should Aurizon elect and then fail to finish a pre-feasibility study or a bankable feasibility study before the deadlines, Radisson would be entitled to acquire 100% of Aurizon’s interest in the property for $1 (subject to the occurrence of a force majeure or a curable default that is in the process of being cured).

Aurizon would have complete control over all exploration programs. If Aurizon earns its 50%, a joint venture between the two companies would mean each company would take on half of the maintenance costs of the property.

The O’Brien mine was in operation between 1933 and 1956, producing 600,000 oz. gold at an average grade of 16 grams gold per tonne, making it the highest gold grade producer in Quebec.

Measured resources in the old mine area currently stand at 77,600 tonnes grading 5.8 grams gold per tonne for 14,500 oz. Indicated resources are 70,500 tonnes grading 6.9 grams gold per tonne for 15,500 oz. gold. Inferred resources are 392,600 tonnes grading 5.8 grams gold per tonne containing an estimated 73,600 oz. gold.

In the 1980s a new gold zone was discovered on the property called 36 East. Indicated resources for 36 East are 244,900 tonnes grading 12.3 grams gold per tonne totaling 97,100 oz. gold while inferred resources measure in at 165,100 tonnes grading 9.9 grams gold per tonne for 53,700 oz. gold.