North America’s biggest gold producer, Newmont Mining (NYSE), has signed an agreement to explore Mallon Resources’ (NASDAQ) Rio Chiquito gold-silver concession in Costa Rica.
The 28,000-acre property located about 12 miles from Costa Rica’s most active volcano, is known to host a small oxide gold deposit containing about 2 million tons of 0.1 oz. gold per-ton. Those reserves are predicated on an epithermal-type system which in turn relates to hot springs activity. But recent exploration points to the existence of higher grade sulphide material averaging as much as 1 oz. gold per ton.
Having already commenced an extensive geochemical program, it is this material that has attracted Newmont’s interest.
Under an agreement with Mallon, Newmont can earn a 51% interest in the property by spending US$16 million over five years. However, the agreement allows Newmont to drop the option next February after it has spent US$500,000 on preliminary work and made option payments of US$30,000 per month. Mallon, which is primarily involved in oil and gas exploration, operated a small gold heap leach mine on the Rio Chiquito property between November 1987 and June 1989 before shutting the operation down to allow for a full evaluation. With average head grades running at 0.05 oz., Mallon recovered 3,800 oz. gold and 26,000 oz. silver from 100,000 tons of processed material. As the gold zone is open in every direction, a Mallon spokesman said Newmont is hoping that reserves can be expanded considerably.
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