Terraco assembling Nevada property package

Through a series of three property deals, Terraco Gold (TEN-V) hopes to assemble a package of drill-ready gold targets in Nevada.

In a deal with Newmont Mining (NEM-N), Terraco can acquire the Tuscarora property in the Carlin gold trend in Elko Cty. Tuscarora, which consists of 237 claims and about 225 hectares of private land, hosts a number of gold showings in fault breccias, quartz-adularia veins, and fault breccias in rocks of the Mt. Blitzen complex, a 1,500-metre-thick volcanic sequence.

The epithermal system is spread over about 20 sq. km and the mineralization is concentrated around north-northwest-striking and north-northeast-striking faults; both fault systems dip steeply to the west. Some of the mineralized zones disappear under later gravel cover.

Previous drilling returned intersections of 6.1 metres grading 96 grams gold per tonne and 4.6 metres grading 65.8 grams.

To earn in, Terraco must spend US$400,000 in the year following closing and US$600,000 in the second year. Newmont gets US$200,000 cash and 500,000 shares of Terraco over the two years of the agreement and keeps a base net smelter return of 3%, increasing to 4% at US$300-per-oz. gold and to 5% at US$400 per oz.

Newmont can back in within 30 days of Terraco completing the earn-in, by paying 2.5 times Terraco’s expenditures and extinguishing its royalty. There is also an agreement to give Newmont’s Carlin mill preferential access to ore from Tuscarora.

Terraco’s surface sampling confirmed grades of 1 gram to 58.9 grams gold per tonne in grab samples from the property’s East, South Navajo, Modoc and West Modoc veins.

A second deal has Terraco optioning the White Rock property, also in Elko Cty., from Colorado geologists Paul Schmidt and John Thomas. White Rock has previously been explored by Amax Exploration, now part of Phelps Dodge (PD-N); Rio Tinto (RTP-N) subsidiary Kennecott Exploration; and Australian base metal miner MIM Holdings. Amax intersected 6.4 metres grading 1.4 grams gold per tonne in one of its drill holes, while Kennecott subsequently drilled a hole that averaged 1 gram per tonne over 19.3 metres.

Terraco’s option agreement obliges it to fund US$250,000 in exploration in each of two years following signing, including an undertaking to drill at least one hole to a depth of 457 metres (1,500 ft.) or more in each year. The vendors retain a net smelter return on a sliding scale depending on the gold price: below US$300, the royalty is 2%, rising 1% with each US$100 increase in the gold price to a maximum of 8%, payable if the gold price exceeds US$800 per oz.

Mineralization on the property is in north-trending structures in the Rex formation, a Permian-age chert overlain by Tertiary-aged volcanic flows. A Terraco grab sample at White Rock graded 1.5 grams gold and 7.4 grams silver per tonne, with arsenic and antimony values typical of epithermal gold-silver mineralization.

In Mineral Cty., southeast of Reno, privately-held Mountain Gold Exploration and Lane Griffin Associates have dealt an option to acquire a 20-year lease on the Eagleville gold property to Terraco. Eagleville is 13 km east of Kennecott’s Rawhide gold and silver mine, on the edge of the Walker Lane structural corridor.

Eagleville has gold mineralization in quartz-pyrite vein systems and shear zones in intrusive rocks. Four grab samples collected by Terraco’s consultant ran up to 208 grams silver per tonne; two of them returned gold grades of 1.5 and 17.2 grams per tonne.

The vendors get 100,000 Terraco shares and US$100,000 over the first four years of the lease, and US$50,000 annually for the rest. They also keep a 3% net smelter return. Terraco must spend US$50,000 in each of the first two years of the agreement; work commitments rise to US$250,000 annually by the fifth anniversary and remain at that level for the rest of the lease.

The deals are all at the letter-of-intent stage, with Terraco’s consultant still at work on due-diligence investigations.