Barrick options more Queenstake ground

Building on its relationship with Queenstake Resources (QTR-T), Barrick Gold (ABX-T) has acquired options for majority interests in

the junior’s Uchcumachay and South Ancash gold properties in west-central Peru.

The 6,100-ha Uchcumachay property is 140 km south of Barrick’s Pierina development. Work has focused on prospective Calipuy volcanic rocks, in which Queenstake has identified a 3.5-km-long zone of strong alteration and brecciation associated with large structural breaks, which, in turn, are related to caldera edges and a volcanic dome. Targets include gold-bearing hydrothermal silicified breccias.

To earn its 51% interest at Uchucumachy, Barrick must carry out staged expenditures of US$2.5 million over three years, including at least US$500,000 in the first year.

The other new option agreement pertains to Queenstake’s properties in the South Ancash area and to two smaller properties in Huancavelica. Combined, these land holdings comprise 19,500 ha. The 14,000-ha South Ancash properties are 100-130 km south of Pierina and contain Calipuy volcanic rocks, whereas the Huancavelica properties consist of mid-Tertiary volcanic rocks that correlate with the Calipuy. Here, too, Barrick must spend US$2.5 million in stages over three years to obtain a 51% interest.

Following completion of Barrick’s earn-in at either Uchucumachy or South Ancash, the terms are essentially the same as for the junior’s 53,800-ha North Ancash property optioned by Barrick last year. Each party will be able to fund its share of ongoing programs or dilute its interest to 30%, if the program continues, the diluting party will be carried by the non-diluting party through to a positive decision to mine.

If Barrick holds the majority interest at the time a decision to mine is made, Queenstake will have the option of requiring Barrick to finance its share of development costs at prime plus 3%.

At North Ancash, Barrick has completed its first phase of exploration and targeted 24,000 ha for a follow-up program of mapping and drilling of at least two target areas.

For the year ended Dec. 31, 1998, Queenstake posted a net loss of $10.6 million (or 31 cents per share) on interest and other income of $458,808.

This compares with a net loss of $1.8 million (7 cents per share) on interest and other income of $314,141. As of March 31, 1998, Queenstake had $10.7 million in cash.