McNickel to earn 50% of Spud Valley bet

Toronto-based McAdam Resources (TSE) has entered into an agreement with McNickel (COATS), giving the latter company the right to acquire a 25% interest in McAdam’s Spud Valley gold property on Vancouver Island, B.C. Subject to regulatory approval, the agreement calls for McNickel to spend $350,000 on the current bulk-sampling program and make a $150,000 cash payment to McAdam. McNickel also has the right to acquire an additional 25% interest in the property for a 1-year period, by paying $1 million to McAdam.

The Spud Valley property is at the site of a former gold mine which produced 54,000 oz. of gold in the late 1930s and early 1940s. The property hosts several gold-bearing quartz veins which are the focus of current exploration. A mill has been erected on the site to process material being extracted from the underground drifts and test stopes.

Depending on the results of the test-milling program, a decision to proceed to commercial production will be made, the company said. The project hosts total reserves estimated at 247,078 tons grading 0.41 oz. gold per ton. An annual gold output of 15,000-20,000 oz. is forecast for the project by McAdam.

McAdam will remain as operator, and McNickel will enter into a joint venture arrangement to assume its pro rata share of obligations and expenditures on the Spud Valley property.