Kenorland Minerals Ltd (TSX-V:KLD) said it has entered into a property option agreement with a wholly-owned subsidiary of Barrick Gold Corporation for Kenorland’s South Uchi gold property in the Red Lake district of Northwestern, Ontario.
The agreement will grant Barrick, a sector major, the option to acquire up to an 80% interest in the South Uchi Project located within the highly prospective Birch-Uchi greenstone Belt.
In accordance with the option deal, Barrick can earn an initial 70% interest in South Uchi through an expenditure of aggregate $6-million in mineral exploration before the sixth anniversary of the option agreement, of which $3-million must be guaranteed expenditures within the first three years.
READ: Kenorland Minerals updates on its 2021 exploration activities at multiple projects across North America
Barrick must also deliver a technical report in respect of the project that establishes a mineral resource of at least one million ounces of gold prepared in accordance with the requirements of National Instrument 43-101 of the Canadian Securities Administrators.
Additionally, as part of its exploration expenditures, Barrick has agreed to reimburse the Vancouver-based Kenorland for monies spent to date in relation to the project and its costs incurred in exercising an underlying option that comprises part of the project.
“Following the earning of a 70% interest, Barrick and Kenorland will form a joint venture (JV) in respect of the project,” the company statement said. “However, Kenorland will have the option to forego a minority joint venture interest and immediately vest a net smelter returns royalty interest of 3% on currently unencumbered claims and 2% on claims currently encumbered by an existing royalty.”
In the event that a JV is formed, Barrick will have an option to earn an additional 10% interest in the project by solely funding a feasibility study before the 10th anniversary of the Option Agreement.
“In the event a joint venture participant dilutes to below 10% it will exchange its joint venture interest for a net smelter returns royalty of 2% on currently unencumbered claims and 1% on claims currently encumbered by an existing royalty,” the company said.
The South Uchi project covers a portion of Confederation Assemblage volcanic rocks, as well as the boundary between the volcanic-dominated Uchi subprovince to the north and the sedimentary-dominated English River subprovince to the south.
The majority of gold deposits in the Red Lake District are located on the northern margin of the Confederation Assemblage, however, recent discoveries such as the LP Fault Zone on the Dixie Project by Great Bear Resources (TSX-V:GBR) Ltd. highlight the prospectivity of the entire Confederation Assemblage along the southern margin of the Uchi subprovince.
Aside from the gold potential of the area, South Uchi meets many of the criteria for potential lithium pegmatite deposits.
Outside of Ontario, Kenorland currently holds three projects in Quebec where work is being completed under joint venture and earn-in agreement from third parties. The minerals explorer also owns the advanced stage Tanacross porphyry copper-gold project, as well as an option to earn up to 70% from Newmont Corporation on the Healy Project, both of which are in Alaska.
Contact the writer at georgia@proactiveinvestors.com
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