Lonmin to join Muskox PGM hunt

Muskox Minerals (MSK-V) has signed a memorandum of understanding with British-based platinum producer Lonmin to form a joint venture aimed at exploring and developing the Muskox platinum-palladium-copper-nickel project in Nunavut.

Under the proposed agreement, Lonmin, the world’s third-largest primary underground platinum producer, would be granted an option to acquire an initial 50% interest in the Muskox joint venture by funding $18.8 million in exploration on the project over four years.

Lonmin could boost its stake by 10% by funding to completion a full feasibility study on any or all of the joint venture’s prospects.

The company could earn another 5% interest by arranging financing for up to $500 million. It could earn up to an additional 5% by arranging $80 million in financing for each 1% increment.

There will be no further dilution if development expenditures exceed $900 million.

The proposed agreement also contemplates Lonmin’s subscription to a private placement of 1.2 million Muskox units at $1 each, concurrent with the joint-venture agreement. Each unit would consist of one share and one purchase warrant. Each warrant would entitle Lonmin to purchase one additional share at a price of $2 for four years from closing.

The private placement, excluding exercise of the warrants, would give Lonmin 3.75% of Muskox’s outstanding shares on a fully diluted basis.

Located 500 km north of Yellowknife, the intrusion is exposed as an elongated north-trending series of mafic-to-ultramafic rocks. Funnel-shaped in cross-section, it dips gently to the north. It is 15 km wide in the north, narrowing to 600 metres in the south. It is exposed for a strike length of 50 km and continues beneath cover to the north for another 40 km.

The Muskox project comprises the entire intrusion, including its extension beneath cover to the north. With these dimensions, it ranks as one of the largest known layered mafic-ultramafic intrusion in the world. Muskox Minerals compares it to those hosting the Bushveld platinum-palladium deposits in South Africa and the Voisey’s Bay nickel-copper-cobalt deposit in Newfoundland.

The junior began exploring the intrusion in 1995. By 1997, it had acquired the rights to the entire intrusive complex.

Earlier this summer, the first four holes into the Keel-2 geophysical target returned low-grade values. Highlights came from hole 35, which cut a 7-metre-thick zone of disseminated sulphides at 136 metres down-hole and a 21-metre-thick semi-massive sulphide zone at 316 metres down-hole. Results include:

• 0.9% copper, 0.26% nickel, 1.1 grams palladium and 0.12 gram platinum over 3 metres from 312 metres down-hole;
• 0.99% copper, 0.3% nickel, 1 gram palladium and 0.18 gram platinum over 4.5 metres from 317 metres down-hole; and
• 1.28% copper, 0.45% nickel, 1.2 grams palladium, 0.18 gram platinum over 15 metres from 323 metres down-hole.

Drilling on the Keel-1 West geophysical anomaly returned similar results.

Lonmin produces 1.3 million oz. platinum group metals annually from the Bushveld igneous complex in South Africa.