History of mine
Some time previously, production ceased at the mine site and the mill was removed. After the property had changed hands a number of times, it was acquired by ACo, which recommenced limited production, but then ceased production as the projected grade was not achieved, and ACo put the property on care and maintenance, but continued exploration work, with the focus on near-surface targets that were outside the mine footprint – but then also drilled from an underground platform. This work generated a resource in the indicated and inferred categories.
Company acquisition
The Company then acquired an interest in the property including the exploration are outside the mine footprint. The underground workings had been allowed to flood and other historic shafts had been sealed. The existing tracks would be unusable without significant work. The Company has recently initiated engineering studies to determine the amount of capital required to get the complex up and running again.
PEA
The Company’s exploration on the property has focused both on expanding and upgrading existing resources related to the footprint of the old mine, as well as seeking new resources outside the known resource area. None of the identified resources can be classified as reserves. The Company completed a Preliminary Economic Assessment (“PEA”), which envisioned an underground mining operation relying heavily on the existing milling and tailings management infrastructure, and with primary access via an existing adit or shaft located a specified distance from the existing mill. The results of the PEA warrant additional exploration to expand the potentially mineable resource by converting inferred resources to measured and indicated. Substantial additional exploration and evaluation would need to be performed in relation to the mineral resource in order to reach the stage where a decision could be made to proceed with development of the mine.
Proposed transactions
The Company will undertake an exploration and mineral evaluation program to expand the resource. The mineralization was not commercially mined out when ACo ceased production will be expanded by drilling known mineralization to depth and along strike, as well as by exploring for targets that are believed to exist within the historic workings. In addition, the Company will explore outside the footprint.
Ruling
Re the expenses of the proposed program qualifying under s. 66.1(6) – CEE - para. (f).