Cominco will concede 151,800 ha of prospective ground in return for a greater stake in the project.
The added acreage will bring the total land position of the joint venture to 242,800 ha. The agreement also increases the area of interest around the joint venture to nearly 2.4 million ha, up from 345,000 ha.
As a result, Cominco’s interest in the joint venture increases to 65% from 60%.
As outlined in the previous agreement, Cominco must spend US$27.5 million to complete a positive feasibility study. The new deal extends that expenditure over seven years, instead of the original four.
Annual cash payments to Solitario are now tied to the price of zinc. They range from US$100,000 at prices below US51 cents per lb. to US$500,000 at prices above US60 cents per lb. Solitario has already received its cash payment for the year, totalling US$100,000.
Also, the revised agreement calls for a minimum of 3,000 metres of drilling per year, whereas the previous agreement had no minimum.
In 1999, Cominco is to spend US$2.5 million on a program that will include mapping and sampling of the new ground, as well as drilling of the Florida Canyon prospect and other targets.
Cominco is responsible for all funding through to and including the feasibility study. Solitario is thereafter responsible for 35% of construction costs. If Solitario cannot come up with the funds, Cominco will provide them, though the junior would have to repay the amount through production.
The transaction does not affect Solitario’s joint venture with Billiton at the nearby Soloco zinc project.
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