Yellowknife’s former Con Mine is being lined up for sale to junior exploration company Gold Terra under the terms of an agreement announced on Monday.
Gold Terra said it had reached a deal that gives it “the option, upon meeting certain minimum requirements,” to buy Con’s current owner Miramar, a subsidiary of mining company Newmont.
If the purchase is completed, it would include all of the assets, mineral leases and claims, and surface rights at Con, alongside some surrounding land.
Con Mine closed in 2003 and is in the final stages of remediation. In a recent report, Con’s current owners said the last cleanup work of any significance is anticipated this coming summer. While some parts of the remediated land could support industry again, most are presently earmarked for nothing more than light recreation, such as trails or sports fields.
However, Con and its rights are attractive to Gold Terra as the junior firm seeks to increase the amount of gold identified on its property, with the ultimate hope of presenting enough gold to secure the investment that will start a new mine.
Gold Terra already owns a crescent of land around Yellowknife that shows promise. Monday’s deal also provides $1.5 million in funding for Gold Terra, in return for Newmont becoming a minor shareholder in the company (less than five percent, a news release stated).
Gerald Panneton, Gold Terra’s executive chairman, said the agreement to potentially purchase Con was “a significant step for Gold Terra to increase our resource base [and] add to our current inferred mineral resource.”
According to Gold Terra, the deal involves the company committing to a final cash payment of $8 million if Con is purchased.
Gold Terra says Con’s closure in 2003, when gold prices were too low for production to continue, means “historic, un-mined reserves remain in the mine property along with other unexplored high-potential areas.”
Around six million ounces of gold were extracted from Con between 1938 and 2003. Gold Terra thinks up to another 1.5 million ounces remain.
The company now plans an expanded two-year drilling program south of the original Con Mine.
The deal comes with a range of clauses that allow Newmont to benefit if gold production resumes on the Con property, including the ability to buy back a majority stake in Con if Gold Terra discovers at least five million ounces of gold in the area.
Gold Terra’s exploration north of Yellowknife has to date uncovered an estimated 1.2 million ounces.