Placer to buy stake in Orex’s Goldboro

Toronto-listed Placer Dome can acquire a 65% interest in the Goldboro property in Guysborough Twp., N.S.

To do so, it must pay $30 million to Orex Resources (ME) and make various exploration and development expenditures. The expenditures will include a feasibility study, and possibly the capital costs associated with development and construction.

Option payments for the first three years are scheduled to be $50,000 in the first year, followed by $75,000 the year after and $100,000 in the third year, while expenditures are slated to be $500,000, $750,000 and $2 million in each of the three successive years. From the fourth year onwards, annual option payments and expenditures will be $100,000 and $200,000, respectively, until a sum of $30 million is spent.

At that point, a joint venture will be formed, with Placer holding a 65% interest and Orex holding the remaining 35%.

Orex may elect to continue contributing its pro rata share of exploration and development costs, or it may choose to convert its interest into a sliding-scale net smelter return (NSR) royalty, varying between 0.75% and 4.5%, depending upon the price of gold in U.S dollars.

Placer will operate the project as long as it maintains a half interest in the project. The senior will also hold a first right of refusal to buy Orex’s interest or its NSR. The cost of the acquisition in either case will be $20 million.

Orex has invested about $20 million in the Goldboro project, defining a geological resource of 20 million tonnes averaging 3.3 grams gold per tonne.