Photo by: Reuters
TORONTO (miningweekly.com) – Idaho-focused mine developer Atlanta Gold has appointed a mining contractor to produce ore from its Neal property, in Idaho, that will provide it with cash flow as it finalises the process flow sheet in preparation for the extraction of a bulk sample from its flagship Atlanta gold project later this year.
TSX-V-listed Atlanta said Knife River Corp (KRC) would mine certain patented lode mining claims known as the Neal property, located about 24 km from Boise, Idaho.
Daisy Mining & Land had leased the claims to KRC, which then assigned key provisions of the lease to Atlanta subsidiary Atlanta Gold Corp (AGC). AGC had also staked seven more contiguous claims on public land that was open to mineral entry.
Under the terms of the agreement, KRC would mine and transport the ore from the Neal property for about 37 km to KRC's property located on Amyx Lane, for crushing and delivery to AGC.
AGC would then process the materials at the KRC property.
AGC would pay a tonnage royalty of $3 per dry ton delivered and a 3% net smelter return royalty, payable to Daisy Mining & Land.
Production from the Neal property would be able to continue during the winter, when the Atlanta project was largely inaccessible.
Further, Atlanta Gold had struck a loan accord with a corporation, controlled by Eric Sprott, to borrow $600 000 to buy the processing equipment and start processing.
The unsecured and noninterest bearing loan would be repaid by delivering 1 000 troy ounces of gold, or its cash equivalent, payable in instalments over an 18-month period. The loan would also be convertible at the lender's choice at a conversion price of C$0.05 a share during the initial 12 months and at C$0.10 a share thereafter.
The lender would also receive a five-year option to buy, solely from gold produced from the Neal property, up to 2 500 oz of gold at $1 400/oz.
“Having property that has access, in all seasons, with similar metallurgy to Atlanta will advance the research required to verify the company's objective of producing a mined product with the least environmental impact. This is also an opportunity for the Boise operations to provide work for seasonal employees [for] a longer period. It will reduce the turnover and attract qualified and experienced personnel,” Atlanta Gold president and CEO Ernest Simmons said.