International Tower Hill Mines Ltd. March 4 said it has signed a letter of intent to enter into a joint venture with American Mining Corp., a private Nevada corporation, on International Tower Hill’s high-grade Terra gold project in Alaska.
The Terra project, located between the Revelation and Terra Cotta mountains of the Alaska Range, consists of 235 State of Alaska unpatented lode mining claims currently held 100 percent by International Tower Hill, plus an additional 5 unpatented lode mining claims held under lease (subject to a 3 percent to 4 percent NSR royalty to the lessor, dependent upon the gold price).
Terra hosts a current NI 43-101-compliant inferred resource of 428,000 metric tons at a grade of 12.2 grams per metric ton gold (168,000 contained ounces) and a grade of 23.1 g/t silver (318,000 contained ounces), at a cutoff grade of 5 g/t gold, in a vein system which remains open.
Subco, an Alaska subsidiary of American Mining, and Raven Gold Alaska Inc., a subsidiary of International Tower Hill, will form the joint venture with the aim of advancing Terra to production. It is anticipated that AMC, as operator, will commence a project development program in June 2010.
To earn a 51 percent interest in the Terra project American Mining will contribute US$6 million over 3 years, including US$1 million in 2010. Of these expenditures, US$100,000 will be paid to International Tower Hill in each of the first and second years to partially reimburse the company for the cost of constructing the existing camp facility at Terra. The Nevada-based miner will also pay the US$300,000, and issue 750,000 American Mining shares, over the same three-year period.
In addition, the JV has granted Raven a sliding scale NSR royalty of between 0.5 percent and 5 percent (depending upon the gold price) on all precious metal production from the property and a 1 percent NSR royalty on all base metal production. The royalty to Raven is in addition to the current royalty payable to the underlying lessor.
Upon having completed its initial contribution, Subco will have the option to increase its JV interest to 80 percent by funding an additional US$3.05 million in the fourth year, plus a payment of US$150,000 and issuance of 150,000 additional shares to International Tower Hill.
International Tower Hill President and CEO Jeff Pontius said, “The joint venture with AMC will significantly benefit ITH shareholders by partnering with an experienced and highly capable underground development group such as AMC. This joint venture, along with our recently announced Chisna joint venture, continues to position the company’s non-Livengood assets as strategic building blocks for our Raven Gold initiative, in which we plan to build a company with significant exposure to partner funded, non-operator, gold-silver production via royalty and/or carried interest agreements”.
Formation of the JV is subject to the settlement and execution of a formal agreement and the completion of due diligence on the Terra project, both to be completed on or before May 19, 2010.
