Euro-Nevada’s Hasbrouck property dealt to FMC

Royalty specialist Euro-Nevada Mining (TSE) has granted to FMC Gold, an option to buy its Hasbrouck Mountain Gold property near Tonopah, Nev., for $2.39 million(US), the company said recently.

Under the agreement, Reno, Nev.-based FMC Gold must make the payments over two years while Euro-Nevada retains a 2% net smelter royalty on the first 800 ft of elevation and a 4% net smelter royalty on reserves mined below this depth.

In certain circumstances, the royalties increase to 2 1/2% and 4 1/2% respectively, said President Pierre Lassonde at the company’s recent annual meeting in Toronto.

FMC Gold has started an extensive exploration program on the Hasbrouck property using two drill rigs in an effort to enlarge a drill- indicated geological reserve inventory of 3.2 million tons (270,000 oz) grading 0.038 oz gold per ton and 0.61 oz silver.

The Hasbrouck deal brings Euro- Nevada’s royalty holdings in the Nevada gold belt to five. Incorporated in October to hold the non- producing assets of affiliate Franco- Nevada Mining, the Toronto-based company’s other royalties include the Goldstrike North property where Euro holds a 4% net smelter royalty and 5% net profits interest. Goldstrike North

Located just north of American Barrick Resources’ (TSE) Goldstrike mine, the 1,000-acre Goldstrike North is being tested by definition drilling over its eastern section after geophysical anomalies were outlined earlier this year.

So far, American Barrick has drilled six holes in one of the better areas with at least two returning good ore grade intercepts.

Meanwhile, Euro-Nevada is anticipating $500,000 cash flow this year (increasing next year to $1 million) from the Maggie Creek mine at Carlin, Nev., where operator Newmont Gold is planning to drill a series of 1,200 ft holes to test for deep sulphide reserves.

Reserves at Maggie Creek stand at about 198 million tons grading 0.042 oz down to a depth of about 600 ft.

Another source of cash flow to the Euro-Nevada account, is the Santa Fe heap leach gold mine where operator Lacana Mining (TSE) is planning to produce about 50,000 oz gold and 275,000 oz silver annually beginning in September.

Back in March, Euro-Nevada acquired a 1 1/2% net smelter royalty on the Santa Fe property which is located 32 miles east of Hawthorne, Nev.

Other royalty interests include Rayrock Yellowknife Resources’ Marigold mine near Battle Mountain, Nev., which is currently being brought to production. Convertible debentures

For the period ended March 31, Euro-Nevada had $4.1 million in working capital. With 2.1 million warrants outstanding (exercisable at $2 before Oct 31), the company can add an additional $4.2 million to its treasury.

But after issuing $8 million(U.S.) in subordinated convertible debentures, the company can bring its working capital position to $16 million. The proceeds will be used to acquire additional royalties, Euro- Nevada says.