TORONTO (miningweekly.com) – Emerging gold producer Patriot Gold has issued an arbitration demand to joint venture (JV) partner and optionee Northern Vertex Mining, citing unhappiness regarding the required scope and technical details of the bankable feasibility study (BFS) for the Moss gold/silver project, in Northwest Arizona.

Northern Vertex Mining has the right to earn a 70% interest in the project by completing an $8.5-million investment over five years and a BFS. Subsequent to the earn-in, financing of the project would be on a proportional basis.

However, under the exploration and option agreement, Northern Vertex is required to prepare a BFS as part of the earn-in requirement. Patriot asserted on Friday that the feasibility study as proposed by Northern Vertex did not meet the standards of a BFS as contemplated by the agreement.

Further, Patriot said that Northern Vertex had an obligation to pay the company net operating profit (NOP) from the initial production at the Moss mine.

“Under the agreement and subject to the provisions of Section 8.1, any NOP realised by Northern Vertex from the sale of precious metals must be paid to Patriot. The dispute between the two parties relates to whether the precious metals produced from the Moss mine, to date, are subject to the NOP provision of the agreement,” Patriot outlined in a statement.

The next step in the arbitration process would be for both parties to agree on an arbitrator or, should they not be able to agree on one, the appointment of an arbitrator.

Northern Vertex did not comment on the arbitration request on Friday.

The Moss deposit was an epithermal, brecciated, low sulphidation quartz-calcite vein and stockwork system, which extended over a strike length of 1 400 m and had been drill tested to depths of 370 m vertically.

The project was a potential heap leach, openpit operation, which was currently being advanced to the feasibility study stage, incorporating patented land only.

The BFS was currently targeted for completion in the second quarter of 2015.

At a cutoff grade of 0.25 g/t gold, the November updated mineral resource estimate consisted of a measured resource of 4.86-million tonnes, grading 0.97 g/t gold and 10.4 g/t silver for 1.10 g/t gold equivalent and 172 000 oz of contained gold equivalent. The indicated resource comprised 10.62-million tonnes, grading 0.66 g/t gold and 8.7 g/t silver for 0.77 g/t gold equivalent containing 263 000 oz of gold equivalent for a combined measured and indicated resource of 435 000 oz of gold equivalent.

The Moss project currently had 2.18-million tonnes, grading 0.55 g/t gold and 5.6 g/t silver for 0.62 g/t gold equivalent in the inferred resource, containing 43 000 oz of gold equivalent.