Since their acquisition, Energex has spent over $11 million on its Toodoggone properties. The agreement does not include the company’s Moose property or the JD property.
Cheni estimates that the Al claims hosts at least 250,000 tons of drill-proven material containing 70,000 oz of recoverable gold. This figure is more conservative than Energex’s last drill-proven figure of 375,000 tons grading 0.28 oz per ton.
The deal, expected to close by year-end, calls for Energex to retain a royalty of $9 per ton mined and milled for the first 250,000 tons of material.
The per ton royalty is subject to an escalation clause of $1.25 per ton for each $10(US) increment in the price of gold above $400. Any tonnage mined and milled above the 250,000-ton figure is subject to a 3.5% net smelter royalty. An advance royalty of $1.15 million will be payable when a final deal is signed.
Cheni declined to estimate the cost of bringing the small open pit deposit into production. Expenditures will include a 35-km haulroad to Cheni’s existing mill as well as the required open pit mining equipment.
Cheni will also be looking at possible areas for exploration on the Al claims although President Paul Girard indicated that the company’s plate is somewhat full next year with $1 million budgeted for exploration on the company’s Cliff Creek zone.
Energex needed the advance royalty for working capital. The company is exploring a number of oil and gas prospects it acquired when it took over Realm Resources of Houston, Tex.
Energex President Victor Bradley said the company was interested in optioning two remaining properties in the Toodoggone and that a major mining company was considering an option on the Gold Springs project in Nevada.
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