Hydra entitled to royalty on Nighthawk

As part of a revised agreement with Pamorex Minerals (TSE), Hydra Explorations (TSE) will relinquish all title to the NightHawk Lake property near Timmins, Ont., in exchange for $45,000 and a royalty interest in the proposed mine. Last month, Pamorex announced a deal with Giant Yellowknife Mines (TSE) whereby Giant may earn a 67% interest in Nighthawk Lake by bringing the old Porcupine Peninsular mine back into commercial production within a 2-year period.

Hydra’s interest in Nighthawk Lake dates back to the mid-1970s, when it optioned the property to Pamour Porcupine Mines.

The Porcupine Peninsular mine was a modest producer in the 1920s when gold was selling for about $20 per oz. In 1978, Pamour Porcupine Mines resumed production temporarily, and Hydra made some money on royalties.

Hydra’s revised royalty agreement is based on either a net profit interest, or the tonnage of ore mined, whichever is greater. Using current gold prices, Hydra calculates royalty income will amount to about $300,000 per year at full production. Should the price of gold increase, Hydra’s percentage interest will also increase.

Based on Pamorex’s prefeasibility work, the prospect contains preliminary reserves of 1.6 million tons grading 0.17 oz. gold per ton. At full production, the mine would feed the nearby Pamour mill at a rate of 700 tons per day.

Hydra, which also has net smelter royalty in the Colomac gold project near Yellowknife, N.W.T., traded recently at 75 cents.