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Thursday, 30 May 2013
Terraco Gold to reap rewards from "outstanding" drill results at Midway/Barrick joint venture
With some objectively outstanding drill results released today from the Spring Valley project in Nevada, Terraco Gold(CVE:TEN) is in prime position to reap their benefits as the company has an option for up to an 3 per cent net smelter returns royalty on the developing property.
The Spring Valley property, which is a joint venture betweenBarrick Gold (TSE:ABX) and Midway Gold Corp(CVE:MDW), also adjoins Terraco's 100 per cent owned Moonlight project that spreads over 35 square kilometres, providing blue-sky potential for the junior gold company.
Midway announced Wednesday recent drill results from the Spring Valley project, highlighting an interval of 361 metres of 1.47 grams per tonne (g/t) gold starting at 35 metres depth, which includes 21 metres of 7.54 g/t gold and 23 metres of 3.02 g/t gold.
"This is unbelievable news for Midway and Barrick, as the grade and widths go well beyond what they have pulled from this deposit in the past, and combined with more results like these, they could likely improve overall grades and economics," says president and CEO Todd Hilditch.
"These results are effectively a stamp of approval for Barrick moving forward with the project," he adds, referring to the major gold producer's recent announcement that it has earned into a 60 per cent stake of the project, with the intention to spend another $8 million for another 10 per cent, totalling 70 per cent.
Despite recent challenges at Barrick, Hilditch says that the company seems to be re- focussing on where "the bread and butter" comes from - that is, Nevada.
"The further Barrick goes down the path to production at Spring Valley, the more likely that our royalty option will be worth a lot of money down the road."
"The expectation is that this will be a Barrick mine, and therefore we will have a Barrick royalty," the Terraco chief says.
In late April, Terraco agreed to a third three-way royalty transaction under which it would get a US$1.0 million non-dilutive cash infusion and an option to acquire a net smelter returns (NSR) royalty on part of the Spring Valley gold project. The deal represented the third net smelter returns transaction that Terraco has signed relating to the Nevada property.
Together with the company's first two NSR transactions on the project in 2011 and 2012, Terraco now has royalty coverage, either by direct ownership or option, of up to 3 per cent NSR on the developing project, which is expected to advance through scoping and into pre-feasibility status this year.
Midway also said Wednesday that the Spring Valley deposit remains open for expansion at depth and to the north - providing more upside for all the three companies involved.
Aside from royalty coverage on the Nevada gold project, Terraco is also focused on advancing its near-million ounce Nutmeg Mountain /Almaden (Nutmeg) gold deposit in Idaho.
Shares of Terraco are currently trading at 13 cents, while Midway stock is changing hands at $1.12 on the TSX Venture Exchange.Barrick Gold is trading at $20.38, up 2.5 per cent.