Fairmile leases Eastgate project, joint venture with Echo Bay
FAIRMILE GOLD CORPORATION
April 5, 1999
ASE: FLA
Fairmile leases Eastgate project, joint venture with Echo Bay
Vancouver, BC - Fairmile Gold Corporation (Fairmile, ASE:FLA) is pleased to announce that it has concluded two important letter agreements regarding a new project in central Nevada. The first allows Fairmile to lease the Eastgate gold/silver project, and the second provides exploration funding for the project through a joint venture with Echo Bay Mines Ltd. (Echo Bay).
The approximately 600-acre project is located about 10 miles to the northwest of Fairmile's Highland project, where showings of high-grade gold/silver occur in a similar geologic setting. Fairmile has the right to lease the Eastgate project for annual minimum advance royalty payments beginning at $7,500 and escalating to $24,000 in 2002, and a NSR royalty on production of 3% reducing to 1% after US$1.25 million in payments.
Echo Bay can earn a 51% interest in the Eastgate project by spending US$500,000 over a six-year period, reimbursing Fairmile for payments to the underlying owners, and making nominal payments to Fairmile. After earning a 51% interest, Echo Bay will be responsible for
funding the next US$1.5 million of joint-venture expenditures. Echo Bay has the option of purchasing Fairmile's interest in the joint venture any time prior to Fairmile's first cash call by paying Fairmile US$1.25 million and a 1% NSR royalty on production. If that option is not exercised, Fairmile will fund its 49% or accept dilution according to a standard formula. Should Fairmile's interest in the joint venture dilute to 10% or less, it would convert to a 1% NSR royalty that increases to a 3% NSR royalty after the underlying owner's royalty is reduced to 1%.
Fairmile interprets Eastgate to be at the upper level of a low-sulfidation, epithermal gold/silver system. The target is a lower level of this system where bonanza-grade gold/silver deposits, similar to those in the Midas District, are thought to exist.
Veins cut Tertiary volcanic rocks at Eastgate, and the main vein historically produced a small amount of high-grade gold. Freeport McMoran in 1987 and U.S. Borax & Chemical Co. in 1988 explored the project for disseminated gold. Their surface and underground sampling
and limited drilling of the main vein were encouraging, with the best drill intercept being 15 feet (not true thickness) of 0.343 ounces gold per ton in Borax hole EG-4. Cabot Resources Corp. in 1990 drilled a fan of four reverse-circulation holes up section and one hole down
section from EG-4. They reported intervals between 5 and 20 feet long (not true thickness) with grades between 0.073 and 0.563 ounces gold per ton. These holes have tested only a small portion of the main vein, and detailed mapping is expected to delineate cross faults
where thicker, higher-grade mineralization is possible.
Fairmile is actively exploring for gold deposits in Nevada, concentrating its efforts on those properties that may host bonanza-grade, epithermal gold deposits. Joint ventures with quality
mining companies, such as Echo Bay, allow Fairmile to grow even during adverse market conditions. Fairmile also controls the Buffalo Valley project, located along the Battle Mountain Gold Trend. To obtain more information about Fairmile, visit our Web Site at fairmile.com or contact Investor Relations at 1-604-257-4254.
"Joseph Anthony Kizis, Jr."
Joseph Anthony Kizis, Jr.,
President and CEO
This News Release contains forward-looking statements that are subject to various risks and uncertainties. Such statements contained herein represent management's best judgement as of this date based on information currently available. Actual results may differ materially from those currently anticipated in these statements.
The Alberta Stock Exchange has neither approved nor disapproved the information contained herein.
Telephone: (604) 257-4254
Fax: (604) 608-2949 |
