Sherwood Mining (SWD-V) has inked a letter of intent to earn up to a 70% interest in any diamondiferous bodies discovered on nearly the entire 80-km-long Archean Hope Bay greenstone belt in Nunavut held by Miramar Mining (MAE-T) and Hope Bay Gold (HGC-T).
Under the proposed deal, Sherwood can earn up to a 50% interest in any diamondiferous bodies by spending $2 million on exploration over four years. The company can increase its interest to 70% by solely funding a 20-tonne bulk sample on any diamond discovery. The deal is subject to board approval by all parties and execution of a formal agreement within 30 days of signing the letter of intent.
Hope Bay Gold chairman and CEO David Fennell said the agreement gives his company and Miramar the opportunity to reap the rewards of any diamond discoveries on the belt without diverting their energy and financial resources from the exploration for gold at Hope Bay.
About 1,105 sq. km of the Hope Bay claim block has been covered by an airborne magnetic survey with line spacings of about 200 metres. A 263-sq.-km portion was covered by an airborne magnetic and electromagnetic survey at 50 metre spacings. A reinterpretation of all the geophysical data for the Hope Bay and Elu belts will target the identification of possible kimberlitic targets. Also, 154 till samples will be processed for diamond indicators minerals. A follow-up till sampling program is planned.
Earlier this year, Hope Bay and Miramar increased resources at Hope Bay to 10 million tonnes grading 13.3 grams gold per tonne. The resource is spread among the Boston, Doris and Madrid deposits.
A subsequent independent scoping study on the Doris area alone concluded that the high-grade Hinge zone can support a stand-alone operation with a capital investment of $26.7 million. A stockpile of 9,000 tonnes of Boston material would expand the Hinge zone resource to the tune of 471,600 tonnes averaging 18.5 grams gold.
At a proposed daily mining rate of 600 tonnes production would hit 271,724 oz. gold over 2.1 years. Initially, the near-surface deposit would be mined by open-pit methods followed by underground bench-and-fill or room-and-pillar extraction. Cash costs are projected at US$114 per oz.; total costs, at US$177. Assuming a gold price of US$260 per oz., the project has a payback period of 15 months, which falls to 12 months at a gold price of US$300 per oz. The mill and facilities will be designed for a 10-year life, allowing Miramar to develop other deposits in the belt.
The Hope Bay belt forms a large contiguous block measuring about 15 by 85 km. It lies about 30 km to the southwest of Sherwood’s Elu belt, which Miramar and Hope Bay Gold spun off to Sherwood last year for 5 million units each to Miramar and Hope Bay. One unit comprised one share and a warrant entitling the purchase of an additional share at 40 for two years. Miramar and Hope Bay currently share a combined 49.5% fully diluted stake in Sherwood.
The Elu greenstone belt is about half the size of the Hope Bay belt and of higher metamorphic grade. The belt lies on the northeast margin of the Slave Craton. Last summer, Sherwood staked additional ground in the area boosting its position to 445 sq. km.
Summer work turned up several gossanous sulphide-bearing showings along a 12-km-long north-south-striking zone of felsic volcanics within the predominantly mafic belt. Massive and semi-massive sulphide mineralization was discovered in two outcrops spaced 8 km apart.
The Peninsula prospect yielded an initial grab assay of 10.3% copper, 5.2 grams gold and 150 grams silver in oxidized subcrop. Subsequent channel sampling returned 0.16% copper over 1.9 metres and 0.51% copper over 2 metres. Anomalous precious metal values ran up to 0.34 gram gold and 28 grams silver.
Channel samples from the Elu 1 showing ran 0.45% copper over 1 metre and 0.23% copper over 4 metres. Both prospects coincide with airborne electromagnetic conductors.
In February, Miramar and Hope Bay agreed to merge and consolidate their ownership of the prospective Hope Bay project in Nunavut. Hope Bay shareholders will receive 0.263 of a Miramar share for each share held. After completing the amalgamation, the new Miramar will have 102.7 million shares outstanding.
The combination is subject to the approval of Hope Bay shareholders by April 28.
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