Bravada Gold Corporation ("Bravada" or the "Company") and a wholly-owned subsidiary of Coeur Mining, Inc. ("Coeur") have begun the previously announced 1,200m (~4,000-foot) core-drilling program on the Russ Target at the Quito Property ("Quito" or the "Property"), see news release NR-09-16. Russ is one of three drill targets developed to date at the Quito property.
Quito is a past-producing, Carlin-type gold property consisting of 342 claims (~2,700 hectares) and is located along the Austin Gold trend in central Nevada. From 1986 through 1989, Quito reportedly produced 174,460 ounces of gold from 1.7 million short tons at an average grade of 6.34 grams per ton, which was approximately 60% of the originally published reserve. However, Bravada has not independently confirmed either the past production or any possible remaining resources, and these historic figures should not be relied upon.
The geological setting at Quito is very similar to many of Nevada's largest and richest Carlin-style gold deposits. Gold mineralization is widely dispersed over the property; however, the highest grades are associated with a series of N20E faults, and secondarily with N40W faults, which formed along the axis of a property-scale anticline in Paleozoic-age sediments. The Russ target is located down the projected axis of the anticline and is down the plunge of an historic resource that has been defined by drilling in unfavorable Upper Plate rocks. The core holes will test more-favorable Lower Plate carbonates, which host the bulk of the historic reserve at Quito and at many other Nevada mines. The Q4 and Aspen targets at Quito are undrilled projections of historically drilled mineralization along N20E faults in favorable Lower Plate carbonates.
President Joe Kizis commented, "Quito is Bravada's second property being drilled this season, with 2nd-phase drilling also underway currently at our Baxter property. In addition to drilling at the Russ target, permitting is progressing well for drill testing of the Q4 and Aspen targets at Quito next season."
Coeur may earn into Bravada's interest in the Property, which can range from 49% to 100% as described below, over a period of five years by funding Bravada's earn-in work commitment, making certain cash payments to Bravada, and paying Bravada an option purchase price of US$2 million if the option is exercised. If Coeur acquires Bravada's interest in the Property, Bravada will retain a 2% NSR royalty on Coeur's percentage of production from the Property.
As per an underlying agreement, upon satisfaction of certain conditions, including work expenditures of at least US$2.5 million, Bravada will have earned a 70% interest in the Property, and the underlying owner of the Property will choose one of the following three options: a) accept ownership of the Property at 30% (Bravada or Coeur at 70%); or b) if more than 2 million ounces of gold have been identified in a final report to be delivered by Bravada in accordance with an agreement between Bravada and the underlying owner, the underlying owner may elect to earn a 51% ownership interest in the Property (Bravada or Coeur at 49%) by paying Bravada (or Coeur, if Coeur elects to purchase the option) 300% of the amounts expended to date on the exploration program by Bravada and Coeur (including the $2.5 million expenditure by Coeur and other amounts expended, including for real estate taxes, maintenance of claims and other holding costs) and funding Bravada's portion of capital with repayment from 80% of Bravada's portion of cash flow; or c) elect not to contribute additional capital to development of the Property, in which case Bravada would be obligated to purchase the underlying owner's 30% interest for either 500,000 shares of common stock of Bravada or US$500,000 cash at Bravada's election, and the underlying owner would retain a 2% net smelter royalty. Coeur's option with Bravada would allow it to acquire whichever level of interest Bravada has earned after the underlying owner makes its one-time election.