American Mining Corporation Signs LOI to Form Production Joint Venture on Terra Gold Project, Alaska
American Mining Corporation announce that it has signed a binding letter of intent to enter into a joint venture with International Tower Hill Mines Ltd., in respect of ITH’s high grade Terra Gold Project in Alaska. Pursuant to the letter of intent, Terra Gold Corp. (“Terra”), an Alaskan subsidiary of AMC and Raven Gold Alaska Inc. (“Raven”), a subsidiary of ITH, will form a joint venture (the “JV”) with the aim of bringing the Terra Project into production. It is anticipated that AMC, as operator, will commence a project development program in June 2010.
Terra Project – Background
The Terra Gold Project is located in the Hartman Mining District of Western Alaska and consists of 235 State of Alaska unpatented lode mining claims currently held 100% by ITH plus an additional 5 unpatented lode mining claims held by ITH under lease (subject to an NSR royalty in favour of the lessor ranging from 0.5% and 5%, dependent upon the price of gold).
The property is centered on an 8 kilometre long trend of high-grade vein occurrences which have returned numerous surface rock samples and drill intersections in excess of 50 g/t gold. The bulk of ITH’s past drilling has focused exclusively on a 400 metre long section of one of the vein systems (Ben’s Vein) discovered to date. An inferred resource estimate, based on 20 HQ diamond drill holes, is published in a National Instrument 43-101 technical report entitled “Summary Report On The Terra Gold Project, Hartman District, Alaska” dated February 1, 2008, prepared by Paul Klipfel Ph.D. of Mineral Resource Services Inc. on behalf of ITH. A copy of the report is available on the ITH website at http://www.ithmines.com and on the SEDAR website at http://www.sedar.com. See also ITH’s press release dated February 7, 2008.
AMC Earn-in and Joint Venture Structure
The initial participating interests of Terra and Raven in the JV will be 51% and 49%, respectively. Under the earn-in formula, Terra may acquire up to an undivided 80% interest in the Terra Project over four years by spending an aggregate of US$9,500,000 in exploration expenditures, paying ITH US$450,000 in option payments and issuing ITH 1,000,000 AMC common shares.
Formation of the JV is subject to the negotiation and execution of a definitive joint venture agreement and the completion by AMC of due diligence on the Terra Project, both of which must be completed on or before May 19, 2010 (subject to extension by agreement).
Greg Schifrin, the President of AMC, stated “The joint venture with ITH will significantly benefit AMC shareholders by advancing the Terra Project into production. We believe the Terra Project, previously held by Anglogold Ashanti (USA) Exploration Inc. and Kennecott (a subsidiary of Rio Tinto plc), possesses a significant upside potential to increase the resource estimate in the additional veins; as well the potential for a bulk mineable large tonnage intrusive deposit.”