VANCOUVER — An agreement signed with Kinross Gold (K-T, KGC-N) will allow Brett Resources (BBR-V, BBRRF-O) to earn 100% of the Hammond Reef gold project, in northwestern Ontario, from its joint-venture partner.
Under the deal, Brett will exercise its existing option to earn a 60% stake in the project from Kinross, and then acquire the remaining 40% by the end of May.
To earn its 60% interest, Brett must complete US$5 million in work on the gold project and issue the remaining 400,000 shares owed to the major under the current option agreement.
The acquisition plan also has Brett agreeing to spend up to $2 million reviewing certain properties in B. C. and the Yukon; if the company acquires any of these, Kinross would be entitled to earn up to 50% in each. Brett will issue 14 million shares to the senior gold producer, giving it roughly 27% of Brett’s stock. Kinross will retain anti-dilution rights in future financings and will get a seat on Brett’s board.
Kinross will also retain a 2% net smelter return royalty on Hammond Reef and certain associated properties held by Brett.
Located near the town of Atikokan, Hammond Reef hosts a historic (non-National Instrument 43-101-compliant) inferred resource of 86 million tonnes grading 0.93 gram gold per tonne (roughly 2.6 million contained ounces gold) using a cutoff grade of 0.4 gram gold per tonne.
The deposit is primarily hosted in a 100-to 300-metre-wide band of altered granitoid rocks within, and adjacent to, a strongly foliated schist-fault zone (the Hammond Reef schist zone). Gold mineralization occurs in fracture-controlled quartz vein stockworks with minor fine pyrite.
The project area sawhistoric mining in the late 1890s from small surface- pit operations.
Brett has a pair of drills turning on the project and anticipates putting out an updated resource estimate for Hammond Reef by midyear.
Shares of the junior rallied on the news gaining as much as 21% — up 23 to $1.30 apiece. Based on its 40.4 million shares outstanding, Brett posts a $46.5-million market capitalization. The stock has a 52-week trading range of 73-$1.63.
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