A recent letter agreement allows a unit of Rio Algom (TSE) to earn an interest in the Lockwood property, a volcanogenic massive sulphide prospect near Everett, Wash.
The 5-sq.-mile property is on leased state land owned 65% by Island-Arc Resources (VSE) and 35% by Formosa Resources (VSE).
Rio Algom can earn an interest by making a cash downpayment, a work commitment and annual cash payments until such time as a feasibility study has been completed and a production decision made.
At this point, the two juniors will have six months to decide whether to accept a 10% net profits royalty and provide 20% of mine costs for a total of 30% of production profits. The option is to accept a 15% net profits royalty and transfer all property interests to Rio Algom.
Island-Arc President Lawrence Barr expects diamond drilling will be part of this year’s program to follow-up copper-zinc-gold-silver intersections encountered in 1991. The previous work was carried out by a unit of Kennecott which later dropped its option.
Island-Arc also reached an “area of interest” agreement with Rio Algom. The agreement is divided into two areas, the East and the West. The West Area is separated from the East by the Lockwood property and third-party lands not subject to the agreement.
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