Under the deal, High River will issue Khaikta up to 6.8 million treasury shares and pay a total of US$2.75 million in cash. High River is to produce a final feasibility study, and the final number of shares issued will depend on the size of the proven and probable gold reserves in the study’s open-pit model.
High River will issue the first 4.6 million shares and pay US$1 million on closing. The company will pony up another 2.15 million shares and US$1.75 million once the feasibility study is done.
The acquisition is subject to board and regulatory approvals, and High River has a due-diligence period before the closing date.
The project is centred on a deposit with a resource of 14.1 million tonnes grading 3.05 grams gold and 14.3 grams silver per tonne, plus 0.93% zinc and 0.57% lead. The estimate is based on a cutoff grade of 1 gram gold per tonne and follows Russian classification guidelines, corresponding roughly to measured and indicated categories in the Western system. As part of its due diligence, High River will bring the reserve figures in line with Canadian standards under National Instrument 43-101.
The mineralization occurs in a 750-metre-long, southeast-striking dilation zone in granitic rocks, which varies from 5 to 100 metres in surface width. Previous Soviet state operators drove five adits into the mineralized zone, covering about 150 metres of the structure’s vertical expression.
The resource data rest on sampling from the internal workings and drilling from underground stations.
Targeted as a starter pit is a higher-grade core estimated at 7.1 million tonnes of 3.7 grams gold and 14.6 grams silver. The core zone occupies a gently sloping valley, which the company believes can be mined at an initial stripping ratio near 1:1. The ratio would eventually grow to 5:1.
Previous metallurgical testing of bulk samples from Berezitovoye indicates that about 28% of the gold could be recovered by a simple gravity circuit; the remainder would be recovered by direct cyanidation with an overall recovery rate of about 90-92%.
The property is also home to several satellite targets identified by geochemical and electromagnetic methods, none of which has been drilled. High River’s deal with Khaikta calls for the Russian company to receive up to another US$1.8 million worth of High River shares should the Canadian company define another 13 million oz. of reserves in the targets within five years after closing.
The property is accessible by gravel roads from the city of Tynda, which is on the Baikal-Amur railway and by the main road extending between the Trans-Siberian railway and Yakutsk. The local electricity grid, powered by several coal-fired generating plants, passes within 60 km of the project.
High River is discussing plans with its 54.5%-owned Russian affiliate, Buryatzoloto, to develop the project as a joint venture. Details of the management, development and ownership structure have yet to be fleshed out. The two companies are also evaluating other Russian acquisition opportunities.
Buryatzoloto’s principal assets are the Irokinda and Zun-Holba gold mines in the Buryatia autonomous region of Russia, east of Lake Baikal. The two mines, taken together, produced 147,176 oz. gold last year at a direct cash cost of US$143 per oz.
High River has been on a shopping spree lately (T.N.M., July 8/02). Late last month, the company agreed to boost its stake in the advanced Taparko project in Burkina Faso, West Africa, to 80% by exercising an option to pick up an 18.5% interest from
High River renegotiated the price down by $200,000, to $1.2 million.
Resources at Taparko stand at 12.6 million tonnes grading 2.6 grams gold at a cutoff grade of 1 gram per tonne. High River is in the midst of a US$500,000 program of core, reverse-circulation and rotary-air-blast drilling aimed at exploring near-surface gold resources.
The company is looking at developing the project with
In late April, High River acquired 333,333 units of
Intrepid has recently closed its agreement to buy the Casposo gold-silver project in Argentina’s San Juan province for US$300,000 over two years and another US$450,000 in advance royalties (T.N.M., June 10/02). Intrepid has committed to a US$600,000 exploration program over two years.
Casposo, with a resource of 1.1 million tonnes grading 14.1 grams gold and 192 grams silver per tonne, was discovered by Battle Mountain Gold, which brought the property to the scoping-study stage without outlining a resource large enough to meet internal company criteria.
In the hope of increasing the resource, Intrepid plans to drill the Mercado occurrence, a 500-metre-long vein system north of the known mineralized zone, where exploration drilling by Battle Mountain intersected gold mineralization over widths as great as 7 metres.
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