Kennecott backs Fischer-Watt on portfolio of 35 properties

Armed with the proceeds of a recent US$2 million private placement, Fischer- Watt Gold (NASDAQ) is planning an aggressive exploration program on various properties in the western U.S., Mexico and Central America. The small, Nevada-based junior has 35 properties covering more than 200,000 acres in these areas, 14 of which are subject to a recent joint venture agreement with a unit of Kennecott.

Under its terms, the major company has the right to further explore and develop any of 14 prospects held by Fischer-Watt in Nevada, California, Mexico and Costa Rica. Kennecott can also earn into prospects acquired by Fischer- Watt during the next 18 months, with provision to extend this for an additional 24 months.

The agreement also involved the purchase by Kennecott of US$2 million of Fischer-Watt common stock for US$1.50 per shares. The major company also has the right to buy US$2 million of stock before January, 1992, and a further US$2 million of shares before January, 1993.

“This is a milestone in the company’s history,” said Tim Watt, chairman of Fischer-Watt. “Having a strong joint venture partner available to fund exploration and development activities will facilitate property acquisitions as well as expedite exploration and development.”

The terms of the joint venture are similar to a previous agreement between the two companies on Fischer-Watt’s Border Mine gold property in Arizona. Under that joint venture, Kennecott can earn an 80% interest by spending US$2 million and taking the property through feasibility. At this point, Fischer-Watt has the option to participate for 20% and retain a 2.5% net smelter royalty, or elect a 5% NSR with no participation.

Dealing with major mining companies is nothing new for Fischer- Watt, which already has joint venture agreements with Amax Gold, Asarco, Barrick Gold Exploration, Minnova, as well as five other joint ventures with Canadian mining companies and privately held companies. The company started its corporate life in 1978 as a private exploration company working in Arizona.

“The major thrust of our business at the present time is to identify and acquire properties for joint venture with other companies, primarily major mining companies,” Watt said.

He told The Northern Miner that the gold properties are of most interest, and the company usually conducts exploration and develops targets before seeking to attract the interest of a joint venture partner. The company has offices in San Diego, Calif., and Kingman, Ariz.