Falco eyes Cantex’s Suwar property

Nickel producer Falconbridge (FL-T) has agreed to earn a 60% working interest in the Suwar massive sulphide project in northwestern Yemen. Currently, the property is wholly owned by Cantex Mine Development (CD-V), a junior company controlled by Charles Fipke, a geologist who made the first diamond discoveries in Canada’s North.

“It’s the best deal I’ve ever made,” Fipke tells The Northern Miner. “It’s far better than the Ekati [diamond mine] deal, which left Dia Met with a 29% interest.”

Fipke says several parties showed interest in the Suwar project. At the end of the day, Falco’s wholly owned subsidiary, Falconbridge International, tied up a deal to earn 60% by funding all exploration and mine development costs leading to the production, within four years, of salable concentrate. Falco will act as operator and is required to spend US$1.4 million on exploration in the first two years and US$2.7 million in the third.

If production is not reached in four years, Falco’s interest will decrease by 0.5% per month until it reaches the 49% level. Thereafter, to keep its option, the company must make monthly payments of US$67,7000, escalating by 10% per year.

If mine development is warranted and approved, Falco will be required to raise Cantex’s share of capital costs. Cantex has agreed to repay the financing from its after-tax share of mine revenue at the U.S. Federal Reserve Fund rate plus 1.125%.

During the mine’s payback period, Falco will have the first right of refusal on the purchase of Cantex’s share of metal concentrate or unconcentrated ore; thereafter, Cantex will be able to market its metal concentrate on its own.

Cantex, which is based in Kelowna, B.C., recently completed a 15-hole drill program on the nickel-copper-cobalt property. Several holes were drilled along the margins of a peridotite and olivine gabbro in a coincident nickel anomaly that contains more than 500 parts per million nickel.

Highlights from the program are as follows:

– Hole 2 — 4.3 metres grading 0.37% nickel, 1.01% copper, 0.021% cobalt and 3.78 grams silver per tonne, starting at a down-hole depth of 30.7 metres. Farther down-hole, 117.3 metres deep, a 2.7-metre intercept cut 0.91% nickel, 0.5% copper, 0.029% cobalt and 1.51 grams silver.

– Hole 5 — 5.64 metres of 0.95% nickel, 0.46% copper, 0.035% cobalt and 1.22 grams silver, starting at 89.45 metres down-hole;

– Hole 6 — 0.8 metre of 1.18% nickel, 0.34% copper, 0.052% cobalt and 0.72 gram silver, starting at 38.9 metres down-hole. At a down-hole depth of 69.9 metres, this hole cut a 0.4-metre section averaging 1.64% nickel, 0.57% copper, 0.072% cobalt and 3.3 grams silver.

– Hole 7 — 6.1 metres averaging 1.42% nickel, 0.47% copper, 0.084% cobalt and 0.92 gram silver, starting at a down-hole depth of 102.4 metres.

– Hole 8 — a 6.1-metre interval of 1.17% nickel, 0.51% copper, 0.062% cobalt and 1.12 grams silver, starting at a down-hole depth of 65.52 metres.

– Hole 11 — 6.5 metres averaging 1.23% nickel, 0.45% copper, 0.113% cobalt and 2.02 grams silver, starting at 67.35 metres down-hole, including a 2.3-metre intersection grading 2.29% nickel, 0.17% copper, 0.019% cobalt and 0.29 gram silver. Farther down-hole, at a depth of 118.1 metres, a 0.6-metre interval cut 3.17% nickel, 0.14% copper, 0.146% cobalt and 0.29 gram silver.

The Suwar project is 60 km west of the capital city of Sana’a. Cantex also holds ground with prospective geology in the nearby region, and an exploration deal with a major is considered likely.