Dayton gets gold project in Chile

The property is situated in the central part of the country, about 30 miles from the city of La Serena.

Drill-indicated proven and probable reserves are reported at 8.6 million tons grading 0.05 oz gold per ton with an additional three million tons averaging 0.44 oz gold in the possible category.

Chevron has spent $11 million(US) on the project during the past four years including 93,000 ft of drilling.

Terms of the agreement include a $200,000 option payment plus the issuance of 300,000 Dayton shares. Upon exercising the option, a further cash payment of $500,000 is due on Jan 1, 1990. Royalty payments in 1991 are to consist of either $1 million or a 4% net smelter royalty, whichever is greater. Thereafter, royalty payments are the greater of a 4% net smelter return or $400,000 per year.

Chevron has also been granted an option to purchase 400,000 shares of Dayton at $2 per share for a period of one year, and a further 400,000 shares at $3 for a 2-year period.

A director of Dayton has advanced the company a total of $500,000(C) secured by a convertible debenture bearing interest at 15.5% per annum. The debenture can be converted into Dayton shares at 85 cents per share.

Dayton President Wayne McClay says Andacollo has potential for an open pit, heap leach operation with water, power and necessary infrastructure available in the area. Metallurgical testing has indicated a 75% recovery with a low cyanide consumption, he said.

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