The amendment to the property interest agreement between Newcoast Silver Mines (VSE) and Gibraltar Mines (TSE) clears the way for a 19,300-ft. diamond drilling program on the Gibraltar North zone this year.
The North zone, part of the Gibraltar mine property near McCleese Lake, B.C., is 100% owned by Gibraltar, while Newcoast retains a 30% net profits interest.
Drilling on the Jan/Summit claims last year encountered
a new zone of copper mineralization, returning values ranging from 60 ft. grading 0.45% copper, up to 440 ft. grading 0.75% copper. The zone covers an area measuring about 1,600×400 ft. and remains open to the south and east. Under the new agreement, Gibraltar can deduct not only operating costs, but exploration, capital and interest costs relating to the North zone. The previous agreement allowed Gibraltar to deduct only direct operating costs, applicable mining taxes and reasonable charges for head office overhead expenses.
In return for agreeing to the amendment, Gibraltar will pay Newcoast $100,000 in advanced royalties as well as begin a $200,000 drilling program this year for completion by the third quarter.
The new agreement does not apply to Newcoast ground which covers the Gibraltar East Stage 3 pit currently being mined.
Mining on the Newcoast ground covering Gibraltar East should be completed in the next few months and depending on the price of copper, the company expects to receive up to $200,000 in royalties.
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