Major General Resources Ltd -
Green Bay project agreement
Major General Resources Ltd
MGJ
Shares issued 31221119
1998-01-16 close $0.32
Monday Jan 19 1998
Also Rio Algom Limited (ROM)
Mr Glenn Shevchenko reports
Major General Resources has executed a substantial agreement with Rio Algom Exploration on its Green
Bay, Newfoundland base metals project. Rio Algom Exploration is a subsidiary of Rio Algom, a major
Canadian base metals producer. This agreement excludes the Hammerdown, Rumbullion and Orion gold
deposits and the related Hammerdown deformation zone.
The agreement encompasses close to 600 claim units owned or controlled by Major General which cover
10,350 hectares. Rio Algom may earn a 50% interest in the properties by making exploration
expenditures of $2 million and cash payments to Major General totalling $285,000 over a four year
period. Rio Algom may earn an additional 10% interest in the properties with a further $1 million
exploration expenditure and $100,000 cash payment to Major General in the fifth year. Additionally Rio
Algom will assume responsibility for future cash payments and work commitments to private
prospecting companies from whom Major General has optioned claims at Green Bay. Major General
remains responsible for share issuances on these optioned properties.
Once Rio Algom has vested at 50% or 60% equity, a joint venture will be formed with both parties
making pro rata expenditures. If Major General elects not to contribute, it will dilute via a standard
formula to 10% equity, which will convert to a 2% nsr, of which 1% may be bought by Rio Algom for
$1 million.
The properties subject to this agreement have high potential for hosting volcanogenic base precious metal
deposits. They are underlain by rock units belonging to the Catcher's Pond formation which contains
extensive, differentiated felsic volcanic flow and pyroclastic sequences. The Catcher's Pond formation is
part of the extensive Appalachian volcanic belt of Maritime Canada and eastern US. Locally, these rock
units are identical to the formations hosting the nearby, very high grade Buchans volcanogenic massive
sulphide (VMS) deposits and regionally they are related to formations of the New Brunswick-Bathurst
camp which has some of the largest VMS zinc deposits in the world.
Since late 1994, Major General has explored parts of the Catcher's Pond formation for VMS type
deposits and has discovered numerous base precious metal prospects. A number of these are high grade
and require further drilling to fully define their size potential. The discovered prospects and geological
information gathered to date all have mineralogy and associated alteration classical of VMS deposits and
are specifically similar to other Appalachian deposits. Much of the property has only been covered by
prospecting, which has indicated the presence of widespread favourable stratigraphy, mineralization and
alteration.
Initially, Rio Algom intends to fly an airborne geophysical survey in early winter and evaluate existing
targets. Ground surveys will follow in favourable areas to search for new drilling target areas which
may host large VMS type deposits. In order to extend the option to 1999, Rio Algom must expend
$400,000 on exploration in 1998 and make a payment of $50,000 to Major General at the end of the
year. |
