After reviewing several airborne geophysical targets, Kennecott Canada Exploration has entered into an option agreement with Montello Resources (MEO-A) and partner Redwood Resources (RDW-A) to earn a 60% interest in the Legend diamond property in northeastern Alberta.
The property comprises 1.5 million acres, 50 km northeast of the core 1.4-million-acre Buffalo Hills diamond project of Ashton Mining of Canada (ACA-T), Alberta Energy (AEC-T) and Pure Gold Minerals (PUG-T).
Ownership of the property is currently shared between Montello and Redwood, which have 70% and 30% interests, respectively. The latter has waived its right to earn an additional 20% interest.
Kennecott, a division of Rio Tinto (RTP-N), can earn its 60% stake in the property by either advancing it to a production decision or spending $30 million on exploration over seven years. Kennecott is required to spend at least $500,000 before May 30 of next year, and an additional $4.5 million by May 30, 2003.
Also, Kennecott will subscribe to 256,666 units of Montello at 75 cents each and 55,000 units of Redwood at $1.50. Each unit will consist of one share and one warrant entitling the purchase of an additional share at $1.50 for Montello and $3 for Redwood, anytime prior to July 21, 2000.
Kennecott will also be required to subscribe to a $175,000 private placement on or before Jan. 15, 1999, and a $600,000 private placement upon taking the first 10-tonne bulk sample of any kimberlite pipe found.
Kennecott recently followed up on several airborne targets with ground geophysical surveying. Montello says drilling could begin as early as late August or early September.
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