Vancouver —
The company is also working on a separate agreement to option three of Teck Cominco’s early-stage gold properties in the vicinity.
The complex deal allows Fronteer to secure rights to a 100% interest in the Agi Dagi and Kirazli projects, which are in the same belt as two major gold producers. Fronteer must issue a total of 650,000 shares to Teck Cominco, which retains a net smelter return royalty as well as back-in rights to the project. Fronteer must also pay US$10 per oz. for existing resources once production begins.
The deal provides Fronteer with much-needed international exposure. The Vancouver-based junior is also exploring five Canadian projects for uranium-copper-gold-silver deposits.
“It’s a big step forward for us, and provides a backstop of solid assets for the company,” says Fronteer President Mark O’Dea.
Fronteer must spend US$5 million on exploration and issue 350,000 additional shares over four years to Teck Cominco to earn its 100% interest in Agi Dagi. In the first year, the company must spend US$1 million.
The Agi Dagi property contains an epithermal gold-bearing system that measures 4 by 2 km. Widely-spaced drilling by Teck Cominco outlined an inferred resource of 11.3 million tonnes grading 1.2 grams gold per tonne, equivalent to 435,000 ounces of contained gold. Fronteer wants to test the resource for extensions along strike, as well as test geophysical targets for possible higher-grade feeder structures.
On the Kirazli property, Fronteer must spend US$3 million on exploration and issue 200,000 additional shares over four years to earn 100%. The company’s exploration commitment in the first year is US$250,000.
The Kirazli property is a high-grade epithermal gold system with a large alteration overprint. Some high-grade intervals (greater than 15 grams gold per tonne) and broader, lower-grade intervals were intersected by previous drilling. This may represent a feeder structure to broader, potentially bulk-minable mineralization.
Teck Cominco will retain a net smelter return royalty of 1% on the Agi Dagi project and 2% on the Kirazli project. Teck Cominco also left the door open so that it can back-in.
Teck Cominco can retain a 60% interest in Agi Dagi by spending either the greater of twice Fronteer’s expenditures or US$5 million at any time prior to Fronteer’s earning its 100% interest. Also, Teck Cominco can retain a 60% stake in Kirazli by spending either the greater of twice Fronteer’s expenditures or US$3 million.
Mark O’Dea believes there is considerable potential for making a major discovery in Turkey. He likens the country to Peru 15 years ago, when exploration was at an early stage.
Fronteer, as operator, has budgeted US$3 million for exploration and plans to start work this summer using Teck Comino’s Turkish-based technical team. It will devote a month to finding and defining targets, then follow these up with at least 5,000 metres of drilling.
The Turkish properties are in the same belt of Eocene and Miocene rocks as
Newmont acquired Ovacik through its takeover of Normandy Mining. Gold production began there in May 2001, from both open-pit and underground operations. Cash costs are about US$122 per oz. and reserves at the end of 2002 were equivalent to 340,000 oz. gold.
Eldorado’s Kisladag project has been advanced to the feasibility stage. The deposit hosts proven and probable reserves of 115 million tonnes averaging 1.23 grams gold per tonne, which is equivalent to 4.5 million oz. A large open-pit, heap-leach operation is planned over a mine life of 15 years. Cash costs are pegged at US$152 per oz.
Be the first to comment on "Fronteer teams with Teck in Turkey"