Sikaman plans to treat the residues, containing reserves of about 302,000 tons grading 0.377 oz gold per ton, over a 2-year period. Total production of 94,500 oz is projected at an operating cost of $95(US) per oz. Capital costs are estimated to be $12 million(US). The project could be in production during the first quarter of 1990.
Sikaman will pay to High River $300,000, a 5% net smelter return, a 10% net profit interest and 300,000 shares of Sikaman (subject to TSE approval). Sikaman may continue to treat ore from other sources at its Snow Lake plant by paying a minimum annual royalty of $75,000 to High River.
As part of the agreement, Sikaman has acquired the interests of Agassiz Resources (TSE), Rex Resources (Canada) and Segal Finance Ltd. as they relate to the arsenical residues.
In other news, Inco Gold reports approval by the VSE of its option to acquire a 50% interest in the Snow Lake gold mine (a former producer) of High River. (The Nor-Acme mine came under the ownership of High River when the company amalgamated with Nor-Acme Gold Mines.)
The Inco Gold-High River deal involves shares and warrants, and flow-through shares. Purchase of all the shares and exercise of all the warrants would yield Inco Gold an approximate 40.1% interest in High River.
Inco Gold, a unit of Inco Ltd. (TSE), has been conducting an underground exploration program at the old mine site.
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