Noranda can earn 50% of Soledad

The Soledad property, five miles from Mojave in Kern Cty., Calif., hosts a large low grade gold deposit with geological reserves estimated at 29.6 million tons grading 0.04 oz gold per ton.

Under terms of the recent agreement, Noranda, or a nominated affiliate of Noranda, may earn up to a 50% joint venture interest in the property. An initial 30% interest can be earned by spending $5 million on the property before Dec 31, 1992, and a further 20% by committing in writing before July 31, 1993, to put the property into production.

Noranda would be required to advance all funds for mine development and construction, subject to receiving 80% of project cash flow until all development costs have been recovered. During the payback period, Golden Queen will receive 20% of cash flows and 50% thereafter. Noranda will be operator if it proceeds with production. The agreement is subject to the conclusion of final documentation.

In order to maintain its right to earn an interest in the property, Noranda is required to spend a minimum of $750,000 per year, but has no other minimum commitments. The senior company also has the right of first refusal on any future financings by Golden Queen, as long as Noranda has an interest in the property.

A 25,000-ft drilling program is under way on the property and is scheduled for completion by the end of next month. It is focused on both step-out and in-fill drilling to increase mineable reserves estimated at 7.68 million tons averaging 0.044 oz gold per ton (0.011 oz cutoff). That figure is associated with an open pit strip ratio of 4.47 to 1. Some 60,000 ft of drilling h ave been completed by Golden Queen since 1988.

Noranda is expected to assume operations control during the first week of December, when the current drilling and metallurgical testing program is completed.

The Soledad Mountain property covers the former Golden Queen and other past-producing mines which were operated by Consolidated Goldfields 1935-1942. Those mines are reported to have produced about 800,000 tons of ore grading 0.23 oz gold per ton from various underground veins before the war.

As of Sept 30, Golden Queen reported cash on hand of $2.4 million(C), sufficient to complete the current drilling program. There are seven million shares of the company outstanding, of which 62% are owned by VenturesTrident Ltd. Partnership of Lakewood, Colo.

VenturesTrident is also active in other U.S. mining exploration and development projects including the Golden Reward mine near Lead, S.D.

]]>