Mineral Mountain enters deal with Holy Terror in Homestake belt

VANCOUVER — Mineral Mountain Resources (MMV-V) is betting that the legendary Homestake gold belt still has some life left in it.

The company has signed an option agreement to earn up to 75% of a property held by privately-owned and 120-year-old Holy Terror Mining Company. The property includes 14 patented and 22 unpatented mining claims spanning 215 ha and sits roughly 60 km of the actual Homestake mine in the same greenstone belt. The Homestake mine being the largest and deepest mine in North America before closing in 2002 after producing over 36 million oz. gold.

News of the option deal sent Mineral Mountain’s share price up 9¢ or 53% over two days to close at 26¢ with roughly 900,000 shares traded.

Holy Terror’s property, sitting in the Keystone mining district, hosts six historical mines of modest size. Overall, between the late 1800s and 1942 the entire Keystone district yielded roughly 106,000 oz. gold, mostly from the Keystone and Holy Terror mines on the property. Mineral Mountain notes that gold mineralization on the property occurs in sulphide lenses and breccias along faults, as Homestake-style iron formation replacement mineralization, and in quartz-carbonate veins.

Between 1974 and 1996 various companies drilled roughly 21,000 metres on the property, with Energy Fuels (EFR-T) the last to explore between 1993 and 1996. Results from Energy’s drill program included hole 94-59 that cut 32 metres averaging 3.91 grams gold per tonne, hole CK3 that hit 11.3 metres averaging 9.09 grams gold per tonne, hole 83-5 that hit 8.9 metres averaging 9.19 grams gold, and hole 94-58 that hit 24 metres grading 3.84 grams gold. Energy Fuels apparently walked away after the gold price dropped in the late 1990s.

To earn a 60% interest in the property, Mineral Mountain has to pay a total of US$1-million, issue Holy Terror an aggregate of 10 million shares, and spend a total of US$7.5-million on exploration, all spaced out over three years. To earn an extra 15% for a 75% interest, Mineral Mountain has to spend US$12.5-million more on exploration by the fourth anniversary of the option agreement.

After earning into the property Mineral Mountain and Holy Terror will forma joint venture, with Mineral Mountain responsible for up to US$25-million of expenditures on the property. After the joint venture is formed and until the US$25-million is spent, Mineral Mountain will also have to pay US$250,000 to Holy Terror every year. Holy Terror will also keep a 3% net smelter return royalty on the property.

Mineral Mountain’s other early-stage properties include the Shining Tree and Straw Lake gold projects in northern Ontario and the Kooteney Arc gold project in southeastern British Columbia. The company had roughly $3.4 million in cash at the end of 2011 and 76.5 million shares outstanding.