Barrick to explore properties near Hemlo mine

The Hemlo mine has been in production since 1989. Credit: Barrick Gold Corp.

While plans are underway to extend the life of its Hemlo mine in Ontario and transition it to a modernized tier two asset, Barrick Gold (TSX: ABX) has also begun looking into properties nearby.

On Friday, the gold major entered an earn-in agreement for MetalCorp’s (TSXV: MTC) Hemlo East property, located about 350 km east of Thunder Bay, Ontario, and adjacent to Barrick’s Williams and David Bell mines, part of the Hemlo mining camp.

The earn-in agreement gives Barrick the right and option to earn an 80% interest in the Hemlo East property by making an initial payment of C$3 million and spending at least C$5.2 million on exploration. Barrick also has to deliver an NI 43-101 technical report on Hemlo East within three years of of the initial payment.

During the earn-in period, Barrick will be the operator of the Hemlo East property. It may withdraw from the agreement at any time, provided it has made the initial payment and fulfilled its obligation to fund the C$700,000 guaranteed amount of expenditures.

MetalCorp’s stock more than tripled on Friday following news of the Barrick partnership, giving the mining junior a market capitalization of C$8.3 million.

On the same day, Barrick closed an option and joint venture agreement with respect to Melkior Resources’ (TSXV: MKR) White Lake project, located 20 kilometers east of the Hemlo mine.

Under option agreement, Barrick can earn a 75% interest in the White Lake property by spending C$4 million on exploration over a period of five years. The gold mining major has a minimum commitment of C$500,000 for the first two years of the option period, and will act as the project operator during the five-year period.

All expenditures beyond the minimum commitment are optional. Should Barrick fail to incur the expenditures during the option period, its option to acquire the 75% interest shall expire.

Upon Barrick completing the expenditures and earning its 75% interest, the companies will then enter into a JV agreement to carry on operations at White Lake. Funds required for further development will be contributed by the JV parties based on their proportional interests.

“With Barrick’s plans to extend the life of the Hemlo gold mine by transitioning it to a modernized tier two asset, it is clear there is still a lot to come from this mining camp,” Melkior CEO Jonathon Deluce said in a press release.

“With Barrick as our partner to move the White Lake project forward, even a small discovery has the potential to be economic because of the property’s proximity in relation to their processing facilities.”

The Hemlo mine has been in operation for over 30 years, having produced more than 21 million ounces of gold during that period.

Shares of Melkior Resources advanced 3.3% by 1 p.m. in Toronto following the Barrick JV deal. The Ontario-focused miner has a market capitalization of C$18.6 million.

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