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Musgrove Minerals Corp
Symbol MGS
Shares Issued 14,591,631
Close 2011-02-01 C$ 0.245
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Musgrove Minerals to acquire Empire mine project

2011-02-02 08:37 ET - News Release

Mr. Jatinder Bal reports

MUSGROVE SIGNS EXPLORATION AND LEASE AGREEMENT FOR 100% INTEREST IN THE EMPIRE MINE PROJECT

Subject to regulatory approval Musgrove Minerals Corp. has signed an exploration and lease agreement with Honolulu Copper and Mackay LLC for 100-per-cent operating interest in the Empire mine project. The Empire mine project is a polymetallic skarn deposit containing copper, zinc, gold and silver located in the Alder Creek mining district in Custer county, Idaho. The mine is located on the east-facing slope of the White Knob Mountains approximately three miles west of Mackay, Idaho. The property consists of 26 patented mining claims, six mill-site claims and 21 unpatented mining claims.

Historic production records indicate the Empire mine produced 765,000 tons grading 3.64 per cent copper, 0.048 ounce per ton gold and 1.57 ounces per ton silver from underground workings in the period 1901 to 1942 (694,000 tonnes grading 3.64 per cent Cu, 1.65 grams per tonne (g/t) Au and 53.9 g/t Ag). Geologically, the mineralization is classified as a polymetallic copper-skarn. Mineralization has been encountered over a strike length of 1,200 metres, thickness of six m to 73 m, and a depth of more than 300 m.

In 1997, Cambior Exploration USA Inc. reported a drill-indicated, near-surface, oxide copper resource of 18.23 million tons grading 0.49 per cent Cu, 0.19 per cent Zn, 0.44 ounce per ton Ag (13.5 g/t) and 0.015 ounce per ton Au (0.48 g/t), with an additional 9.65 million tons of material grading 0.29 per cent Cu and 0.31 per cent Zn (Cambior, 1997). A qualified person has not done sufficient work to classify the historical estimate as current mineral resources, the issuer is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.

The terms of the exploration and lease agreement include payment of cash and shares (all shares issued are at the election of the company as follows:

  1. Non-refundable $60,000 cash payment on signing of the agreement;
  2. $60,000 cash payment -- July 31, 2011;
  3. $14,250 as an advanced quarterly royalty payment on commencement of 12-year mining lease. Expected to commence on Oct. 31, 2011;
  4. $9,000 (U.S.) or the equivalent of common shares -- on commencement of the mining lease;
  5. $11,500 or the equivalent of common shares -- on completion of an NI 43-101-compliant reserve calculation of the oxide resource;
  6. $31,500 or the equivalent of common shares -- on completion of an NI 43-101-compliant reserve calculation of the underlying sulphide resource;
  7. $51,500 or the equivalent of common shares -- on completion of NI 43-101-compliant feasibility report;
  8. $50,000 or the equivalent of common shares -- on completion of land exchange with the U.S. Forest Services;
  9. $175,000 or the equivalent of common shares -- on completion of permit to operate for commencement of mining.

Musgrove will pay a 2.5-per-cent net smelter returns royalty (NSR) on commencement of commercial production and can purchase up to 1-per-cent NSR for $2.4-million (U.S.).

In 2006, Trio Gold Corp. optioned 50 per cent of the Empire mine project to Musgrove. Musgrove drilled 33 diamond and reverse circulation drill holes and commenced preparations on a feasibility report. In 2007, Trio Gold and the property owners commenced legal actions against each other that resulted in a settlement agreement in 2008. As part of that agreement, Musgrove would receive $1-million as compensation from the property owners group. Due to poor market conditions at that time, the payment was not made.

This exploration and lease agreement resolves past issues and will allow the company to move forward with the Empire mine project. This agreement is subject to TSX Venture Exchange approval.

Musgrove will complete the infill drill program as outlined in the company's NI 43-101 report published in 2006 and work toward completion of the feasibility study and economic exploitation of the deposit.

Jack Bal, president of Musgrove, commented, "We are very excited to get back on the property and complete the exploration work started in 2006."

The qualified person for the technical content of this release is Robert M. Hatch, LG.

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