Partners Hecla Mining (HL-N) and Great Basin Gold (GBG-T, GBN-X) have agreed to dismiss all litigation regarding an earn-in agreement at the Hollister property in Elko Cty., Nev.
In April, Hecla asked a Nevada court to clarify and interpret the agreement. At the time, Great Basin said the pair was at odds over the timing of certain project milestones. Those milestones have since been revised to reflect changes in markets and conditions at the project.
Under the revised deal, Hecla must complete 5,600 ft. worth of decline and underground development (including crosscuts and drill stations) to access the Gwenivere and Clementine vein systems by the end of March 2007. The work program also includes the mining of a 5,000-ton bulk sample and 55,000 ft. of underground diamond drilling.
Thereafter, development will be equally funded, with Hecla covering Great Basin’s costs until a feasibility study is delivered, at which point Hecla will be reimbursed.
To earn its 50% stake, Hecla must bring the project to commercial production by Aug. 2, 2009. Hecla is entitled to the proceeds of the first 50,000 oz. of gold (up to US$25.07 million) from pre-production activities.
Late last year, the exploration decline intersected the Gwenivere vein some 2,720 ft. from the portal. Sampling of the exposed vein returned 8.2 ft. (true width) running 3.17 oz. gold and 28.3 oz. silver per ton, and 15.2 ft. of 0.49 oz. gold and 7.9 oz. silver. Assay results are pending for two subsequent vein exposures.
Hecla is in the midst of drilling short, closely spaced holes aimed at upgrading resources to reserves. Hollister’s inferred resource stands at 719,000 tons grading 1.29 oz. gold and 7 oz. silver.
A production decision is anticipated by early 2007.
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