ByIan Ross
Fort Knox Gold Resources Inc. are negotiating with Inco Ltd. to acquire five properties in the Sudbury Basin to explore for platinum group elements and other base metals.
The properties include four inactive mines, McCreedy West, Levack, Victoria and Kirkwood as well as the Norman North PGE-Cu-Ni mineralized zones.
Inco has accepted the acquisition proposal to negotiate a commercial arrangement whereby Fort Knox and its joint-venture partner Dynatec Corp. can acquire the five properties. They have until Dec. 31, 2001 to strike a deal.
The properties, considered non-core assets, were closed in the last few years when reserves became depleted.
"The remaining resources are considered marginal and higher risk because they're low tonnage and low grade," says
Inco spokesman Cory McPhee. "We just don't have the capital right now to proceed with marginal, high-risk exploration in these properties.
"We have some properties that do have some exploration potential and the higher platinum group metal prices have improved the economics of some of the mineralization there."
But McPhee says Inco prefers to focus on their core operating mines and their Kelley Lake and Totten projects. Should the deal come to fruition, McPhee says, it has the potential to bring a considerable amount of investment into Sudbury and add production to Inco's smelter and refinery facilities.
"We're looking to make money off of this, which could be in the form of initial payment in the form of stock in the company, royalties on any production and a toll processing agreement where we would benefit from having our own processing facility operating at capacity."
The acquisition proposal was jointly prepared and submitted to Inco by Fort Knox and Dynatec, a major Canadian mining contracting and service company. Dynatec would maintain a 25 per cent position in the joint venture to explore, develop and mine the properties.
In the Fort Knox press release, the company says the properties "offer exposure to excellent exploration and production potential in the world's largest nickel camp and third most important PGE environment."
The five brownfield properties are within 40 kilometres of downtown Sudbury. Officials with Fort Knox say they believe all of the properties have potential for significant copper, nickel and PGE resources.
Successful completion of these negotiations would already add to the super-heated PGE exploration boom going on
in the Sudbury area, says McPhee.
