Acadia takes option on Bachelor Lake

Having already worked together on a Nova Scotia gold project, Acadia Mineral Ventures (TSE) and Hecla Mining of Canada are teaming up to explore the Bachelor Lake Mines’ (TSE) gold property at Desmaraisville, Que. Hecla Canada, a privately owned unit of Idaho-based gold producer Hecla Mining (NYSE), recently granted Acadia the right to pick up its option on the Bachelor Lake mine where production was halted last summer due to low gold prices.

Under the option agreement, subject to regulatory and board approval, Acadia can earn a 60% stake in the mine and mill by spending $11 million on exploration before Dec. 31, 1992.

To exercise the option, Acadia must issue one million shares from treasury to Hecla by Aug. 31. As well, after transferring all of its Canadian exploration properties into Acadia, Hecla will take back nine million shares of Acadia to become the company’s biggest shareholder with a 52.5% interest. Richmond Gulf (COATS) already holds 14.2% of Acadia’s 22.2 million outstanding shares.

In return, Hecla will provide Acadia with $5.2 million over the next two years to cover exploration expenses. Acadia also has a firm commitment from Hecla on a $900,000 option payment relating to the Mooseland gold project in Nova Scotia.

“With Hecla’s backing, we will be able to participate in much larger projects,” said William Baird, Acadia’s vice-president of finance.

When the Bachelor Lake mine was shut down last July, total reserves stood at 927,900 tons of grade 0.16 oz. gold per ton. Although ore dilution has been a big problem at the Desmaraisville operation since it was brought into production in 1982, Acadia says known reserves on the property can be increased. Acadia has reached that conclusion after reviewing results of Hecla’s due diligence investigation.

But any future decision will depend on the $3.7-million phase- one program focusing on the Main vein below the 12th level where some encouraging intersections including 28.4 ft. of grade 0.34 oz. gold have been reported.

If results of phase one prove positive, Hecla and Acadia would then spend an additional $7.3 million in preparation for renewed production, including mine development and mill refurbishing.