Win-Eldrich increases its stake in Ashdown gold bet

Toronto-based Win-Eldrich Mines (TSE) has taken a major step towards consolidating its position at the Ashdown gold property which could be in production next year.

Win-Eldrich’s 100% interest in the Humbold County, Nev., property was subject to some crippling royalties which would have required the company to pay out 50% of the operation’s cash flow.

They included a 28% cash flow royalty held by Inco Ltd.’s (TSE) wholly-owned U.S. subsidiary American Copper and Nickel and an 8% cash flow royalty owned by a couple of Nevada geologists.

Outokumpu Mines also held 12% pretax net proceeds royalty interest in the heap leach property which Win-Eldrich has acquired for $650,000.

Of that amount, $200,000 was paid by issuing 250,000 shares and the balance will be paid out of a 2% net smelter return royalty.

Win-Eldrich President Reuben Brant is also involved in negotiations to buy out American Copper and Nickel for a maximum $1 million payable out of a 5% net smelter royalty on precious metal production. American Copper holds a 28% interest in a high grade molybdenum deposit which also lies on the 4,000-acre property. It is considered uncommercial at current prices.

The 8% royalty owned by the geologists has been negotiated down to a 1% net smelter return, Win-Eldrich says.

Located 30 miles northwest of Amax’s Sleeper gold mine, Ashdown is known to contain about 1.16 million tons of grade 0.125 oz gold per ton geostatistical. Based on a recent fill-in drill program completed in April, mineable reserves are believed to be 1 million tons of 0.11 oz with 5:1 stripping ratio.

As part of a feasibility study, Win-Eldrich will take a 5 to 10 ton heap leach bulk sample and additional drilling to increase known reserves is also planned.

If a heap leaching operation proves feasible, capital costs are expected to be in the $2 to $3 million(US) range and Win-Eldrich is planning for a 1,000 ton-per-day operation.

In other news, Win-Eldrich has acquired a 7.5% interest in Outokumpu’s interest in the Fisher Islands joint venture property in Red Lake, Ont.

Outokumpu has the right to earn a 50% interest in the property and, when earned, Win-Eldrich will have a 3.75% interest.

To earn its interest, Win-Eldrich spent $150,000, which the company raised by selling 142,857 flow- through shares at $1.05 each. Win- Eldrich may increase its interest by spending additional exploration dollars, the company said.