Merc Agrees to Acquire Colomac Gold Mine Consolidating Indin Lake Gold Camp
TORONTO, Dec. 15, 2011 /CNW/ – Merc International Minerals Inc. (“Merc“) (TSX Venture: MRK) is pleased to announce it has entered into an agreement to acquire the mineral claims and leases of the former producing Colomac Gold Mine (“Colomac“) in the Northwest Territories (“NWT“) from Aboriginal Affairs and Northern Development Canada (“AANDC“). Colomac represents a rare opportunity as a past producer and under-developed gold deposit with exploration potential. Merc believes there is an opportunity to develop resources at Colomac (as historic open pit mining was limited to less than 200 metre vertical depths and only one of five known deposits was developed). All deposits at Colomac remain open to depth and laterally.
- On closing, Merc will acquire 100% interest in the Colomac property, which includes the past producing Colomac Main Zone, four surrounding gold deposits, and several gold showings on the approximately 32,000 acre property.
- The reclaimed Colomac open pit mine historically produced 527,908 ounces of gold with an average head grade of 1.66 grams per tonne gold (“g/t Au“).
- Acquisition consolidates Merc’s Indin Lake land package of approximately a quarter million acres or 90% of the entire Indin Lake Gold Camp.
- ACA Howe International Ltd. (“ACA Howe“) has been assisting Merc in its due diligence and is currently preparing a NI 43-101 technical report and mineral resource estimate for the Colomac property, which will incorporate the five known gold deposits.
- Colomac’s five deposits are open in all directions; only one has been mined.
David Wiley, Merc President and CEO, commented, “The acquisition of the former producing Colomac mine will represent a strategic milestone and completes Merc’s Indin Lake Gold Camp land package by adding a property that is entirely surrounded by our existing claims. We have obtained and analyzed historical data that indicates the potential for a substantial amount of gold to be present within the Colomac deposits. To that end, we have engaged ACA Howe, who visited the site in October 2011 and has been assisting in our due diligence, to complete a NI 43-101 technical report and mineral resource estimate on the property for early 2012. This next year will be a very exciting time for the company as we initiate a new and aggressive growth strategy focusing on increasing ounces at Colomac and advancing our satellite deposits towards a similar status.”
In consideration for the conveyance of the Colomac claims and leases, Merc will commit to reclaim three disturbed historic exploration sites near the Colomac mine within Merc’s surrounding Indin Lake land package. Reclamation will be carried out on behalf of AANDC to a maximum of $5,000,000. At closing, Merc will post security of $5,000,000 (the “Security“) in favour of AANDC to secure Merc’s obligation to perform the required reclamation. Merc will not be assuming the reclamation liabilities directly. The Security will be returned to Merc upon the completion of remediation activities to the satisfaction of an independent third party engineer. AANDC has substantially completed the reclamation of Colomac, with only adaptive management and monitoring phases of the project remaining. Merc is not responsible for any historical environmental liabilities associated with Colomac.
David Wiley continued, “This transaction benefits Merc shareholders by adding a bona fide past producing mine to our asset portfolio, while also allowing AANDC to realize their objectives of expediting historic remediation obligations, providing economic development, and creating job opportunities for the local First Nations communities.”
Closing of the transaction is expected to occur in late January 2012. Merc has entered into negotiations with third parties for a $5,000,000 loan, which Merc intends to use to post the Security required to serve its obligations under the agreement with AANDC.
The Colomac mine is located 220 kilometres northwest of Yellowknife, NWT, within the central portion of the Indin Lake greenstone belt. Access is by winter road from Yellowknife for approximately three months each year or year round by chartered aircraft to a 5,000 foot airstrip at the Colomac mine site. Merc’s Indin Lake claims and leases (Figure 1) surround the property on all sides forming a contiguous land package. Five separate gold deposits makeup the Colomac property: Colomac Main, Grizzly Bear, Goldcrest, Dyke Lake, and 24/27. With the addition of Colomac, Merc has consolidated over 20 continuous kilometres of mineralized structure (Figure 2) that hosts 9 gold deposits (5 at Colomac, North Inca, Diversified, Lexindin, and # 3). To the north the mineralized structure deviates sharply to the west and hosts several gold showings over an additional 18 kilometres.
Gold was initially discovered at Colomac in 1945. In 1990, Neptune Resources Corp. (“Neptune“) put the property into production, but shut down in 1991 due to unfavourable gold prices after producing approximately 139,000 ounces. Royal Oak Mines Inc. (“Royal Oak“) acquired Colomac from Neptune in April 1993. Royal Oak recommenced stripping operations in March 1994, with first gold production in July 1994. Royal Oak closed the mine in December 1997 citing low gold prices and subsequently filed for court protection from its creditors under the Companies’ Creditors Arrangement Act in April 1999 in April 1999. AANDC became the owner of Colomac by way of Court Order dated December 13, 1999 following the receivership of Royal Oak and its related companies and proceeded to complete the required remediation for the site. All mining and milling facilities were removed from the site subsequent to AANDC taking control of the property.
During its peak, Royal Oak employed over 250 workers on the Colomac site. Production statistics are presented in Table 1.
Table 1. Colomac Production History
|Year||Ounces Produced||Tonnes Milled||Head Grade (g/tonne)||Recovery||Cash Cost/oz (US$)||Average Gold Price (US$)|
Colomac’s five known gold deposits lie within a north striking, steeply dipping, Archean greenstone belt of deformed sedimentary and intermediate to ultramafic volcanic rocks. Deposits appear in two distinct geological settings with the Colomac Main, Goldcrest, and Dyke Lake deposits hosted within quartz-feldspar porphyry dykes, whereas the Grizzly Bear and 24/27 deposits occur near or within the sedimentary/volcanic rock contact.
Colomac Main Deposit
All historic gold production has been extracted from the Colomac Main Deposit, which occurs in a north-south striking, quartz-feldspar porphyry dike approximately 6 kilometres long and 50 metres wide bounded by diorite and andesite. Mineralization is predominantly free gold spatially associated with quartz-carbonate veining and minor sulphides. During deformation, the dyke behaved as a competent unit enclosed within more ductile rocks, thus representing the classic competency contrast condition present in many Archean lode gold camps. This has led to the preferential emplacement of gold-bearing veins within the quartz-feldspar dyke.
Figure 1 – Merc Indin Lake Land Package
Figure 2 – Indin Lake Mineralized Structure with Colomac
About Merc International Minerals Inc.
Merc is a Canadian-based exploration company focused on acquiring and developing gold mineral properties in the NWT. Its primary land position covers 209,763 acres or 84,888 hectares in the Indin Lake Gold Camp, located approximately 200 kilometres north of Yellowknife, NWT. Since January 2011 Merc has systematically increased its land position through staking and acquisitions of claims and leases that comprise a majority of the Indin Lake greenstone belt. Upon the closing of the acquisition of Colomac from AANDC, Merc’s land position will increase in size to approximately 242,000 acres or 98,000 hectares. In 2011, Merc completed 11,929 metres of diamond core drilling; the comprehensive assay results for Phase I and II of the drill program were previously reported and are available on the Merc website. Selected results from the 2011 drill program are presented in Table 2 below:
Table 2. Selected Drill Results from Merc’s 2011 Drill Program
|Drill Hole||From (Metres)||To (metres)||Core Length* (metres)||g/t Au|
Lengths are reported as core lengths. True widths are unknown at this time
The technical information in this news release was reviewed and approved by Merc Director, Dr. Michael J. Byron, a Qualified Person under NI 43-101. Historical information was obtained from previous Royal Oak Annual Reports, Royal Oak geology and exploration reports, and Metals Economics Group data.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Merc, including, but not limited to, the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with the uncertainty of exploration results and estimates, currency fluctuations, dependency upon regulatory approvals, the uncertainty of obtaining additional financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. This press release is not, and is not to be construed in any way as, an offer to buy or sell securities in the United States.
PDF with caption: “Figure 1 – Merc Indin Lake Land Package”. PDF available at:http://stream1.newswire.ca/media/2011/12/15/20111215_C7239_DOC_EN_8299.pdf
PDF with caption: “Figure 2 – Indin Lake Mineralized Structure with Colomac”. PDF available at:http://stream1.newswire.ca/media/2011/12/15/20111215_C7239_DOC_EN_8300.pdf