Golden Predator Royalty & Development Corp. June 8 said it has signed a letter of intent with Alexco Resource Corp. to acquire up to a 75 percent interest in the Brewery Creek Project located in northwestern Yukon Territory, 55 kilometers, or 34 miles, due east of Dawson City.
Brewery Creek produced some 278,484 ounces from an open-pit heap-leach operation under Viceroy Resource Corp. until 2002, when low gold prices forced the mine to close. The acquisition of the Brewery Creek Project presents two immediate targets for potential resource development.
Un-mined near-surface oxide gold mineralization remains, and a National Instrument 43-101 resource estimate on the Brewery Creek Project by Ronald Simpson (2005) estimated an indicated resource of 3.98 million metric tons grading 1.135 grams per metric ton gold (145,000 contained ounces) and an inferred resource of 2.2 million metric tons grading 2.01 g/t gold (142,000 contained ounces), using a cutoff grade of 0.5 g/t gold.
The Simpson (2005) report also reiterates that while the regional structural model for Brewery Creek offers potential for the discovery of higher grade sulphide deposits, the depth of drilling to date has been inadequate in testing this model.
Golden Predator, through its Yukon subsidiary, True North Mining Corp., intends to initiate phase-1 of a drilling program this field season once it receives all necessary permits to begin testing for these deeper and higher grade targets.
Under terms of the letter, Golden Predator can earn up to a 75 percent interest in 793 contiguous quartz mining claims and leases and certain related assets in three stages as well as a 50 percent interest in certain barite deposits. To earn various levels of equity in the project Golden Predator must incur exploration spending on an annual schedule that could total C$6 million by 2014.
Alexco will have a one- right to buy back 10 percent interest in the project by paying 2.5 times all exploration and development spending incurred by Golden Predator that exceeds C$4 million.
Golden Predator may also earn a 50 percent interest in known and future discoveries of deposits of barite on the project by incurring exploration and development expenditures specifically related to the barite of $1 million on or before Dec. 31, 2012 and incurring not less than C$3.5 million of exploration and development spending on the gold potential at Brewery Creek.
The project is subject to two underlying royalty agreements with third parties: a “sliding scale” royalty on the next 21,516 ounces of gold production on the basis of a sliding scale ranging from US$10 per ounce if the average gold price for the quarter is less than US$350 per ounce up to US$40 per ounce if the average gold price for the quarter is greater than US$450 per ounce; and a 5 percent net profits royalty (after recapture of pre-production expenditures) on profits from gold production.
Golden Predator aims to become a mid-tier precious metals producer in Nevada by 2010 and to acquire, explore and develop large intrusive-related gold deposits in the prolific Tintina Gold Trend running through Alaska, the Yukon Territory, and northern British Columbia.
