Queenstake: Barrick Options Queenstake's Uchcamachay and South Ancash Peru Property Package
VANCOUVER, British Columbia--(BUSINESS WIRE)--May 27, 1998-- Queenstake Resources(TSE:QTR. - news) Queenstake Resources Ltd. (TSE-QTR) is pleased to announce our alliance with Barrick Gold Corporation [NYSE:ABX - news] in Peru has been expanded to include Queenstake's Uchcumachay and South Ancash group of properties.
Barrick will have an option to fund U.S.$5,000,000 over three years to earn a 51 percent interest in the combined 25,600 hectares of mineral properties. Barrick has agreed to spend U.S.$1,000,000 the first year of the joint ventures, including a commitment to drill Uchcumachay. This agreement brings the total area in Peru that Barrick holds under option to joint venture from Queenstake to a total of 79,400 hectares.
Queenstake's 6,100 hectare Uchcumachay property is a large well-defined gold target in the Calipuy volcanic rocks which also host Barrick's Pierina gold deposit, 140 kilometers to the north. A 3.5 kilometer zone of strong acid sulfate silica alteration and brecciation has been identified at Uchcumachay associated with large structural breaks related to caldera edges and a volcanic dome. Hydrothermal silicified breccias with gold represent individual targets within the larger altered system. Alteration, especially silicification, is similar to Pierina where Barrick is developing its 7 million ounce gold reserve with production to begin late 1998 at the rate of 750,000 ounces gold per year at production costs of about U.S.$50 per ounce.
The initial year's program at Uchcumachay will include an expenditure of at least U.S.$500,000 and drill testing of one or more targets. To complete its earn-in of 51 percent Barrick must have spent a cumulative U.S.$1,500,000 by year 2 and U.S.$2,500,000 by year 3.
The second joint venture is for Queenstake's additional properties in the South Ancash area plus two smaller properties in Huancavelica, for a total of 19,500 hectares. The South Ancash properties (14,000 hectares) are also in Calipuy volcanic rock and stretch from 100 to 130 kilometers south of Pierina. The Huancavelica properties are in mid-Tertiary volcanic rocks correlative with the Calipuy. Queenstake's preliminary exploration programs have identified a number of target areas worthy of follow-up geological and geochemical studies to identify drill-targets. A first year work program of U.S.$500,000 and a total expenditure of U.S.$2,500,000 over three years to earn 51 percent has been agreed to.
A summary of earn-in requirements is as follows:
Expenditures (U.S.$000's)
Venture Hectares Year 1 Year 2 Year 3 Total
Earn-In
Uchcumachay 6,100 $ 500 $1,000 $1,000 $2,500
South Ancash 19,500 500 1,000 1,000 2,500
-------- ------- ------- ------- -------
Totals 25,600 $1,000 $2,000 $2,000 $5,000
-------- ------- ------- ------- -------
-------- ------- ------- ------- -------
Following completion of Barrick's earn-in, the terms are essentially the same as for the agreement between the Company and Barrick on Queenstake's North Ancash group of 53,800 hectares of mineral properties Barrick holds under option. Each party will have the option to fund its share of ongoing programs or dilute its interest to 30 percent, where if the program continues, the diluting party will be carried by the non-diluting party through to a positive decision to mine. If Barrick holds the majority interest at the time a decision to mine is made, with respect to a project, then Queenstake will have the option to require Barrick to finance its share of development costs at prime plus 3 percent.
We are extremely pleased to continue our alliance with Barrick, the premier gold mining company in North America with over 50 million ounces of gold reserves and better than 3 million ounces per year of production. Barrick has conducted professional thorough exploration on the North Ancash block of Queenstake properties optioned in 1997, and we anticipate similar work at Uchcumachay and South Ancash. They have shown their continued faith in Queenstake's ability to identify high quality properties, and are willing to expend significant amounts from their Peruvian exploration budget on the evaluation of those properties. We look forward to a long and successful relationship with Barrick.
Queenstake is a Toronto Stock Exchange listed company with almost 300,000 hectares of mineral properties in three of the top six rated exploration countries in the world: Peru, Mexico and Chile. As of the end of the first quarter of 1998, Queenstake has C$10.7 million cash, enough to continue operations at the current rate for better than three more years. Queenstake's primary objective is to discover significant orebodies of gold and/or base metals through grass roots exploration.
James Mancuso, Chairman and Chief Executive Officer
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Contact:
Queenstake Resources Ltd.
Doris Meyer, 604/684-1218
604/684-9959 (FAX)
Email: doris.meyer@pro.net
Website: queenstake.com
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