Canadian Gold signs definitive option agreement to acquire Tartan West Property from Hudbay Minerals, Manitoba
Canadian Gold Corp. [TSXV: CAN] reported that it has entered into an option agreement dated May 15, 2025 with Hudbay Minerals Inc. [TSX, NYSE: HBM] under which Hudbay has granted Canadian Gold an option to acquire 100% of the Tartan West property that is immediately adjacent to the company’s Tartan Mine, near Flin Flon, Manitoba.
The option, if exercised, significantly expands the outlook for the company as it looks to add additional high-grade gold resources into the future plan to restart the Tartan Mine.
The rationale for optioning the Tartan West Property is its exploration potential: Expands potential ownership of the Tartan Shear Zone along strike to the west by 100%, from 8 to 16 km; limited historic drilling returned high-grade, near surface gold results. Exploration in the area has been historically focused on the potential for volcanogenic massive sulphide (VMS) deposits, due to its proximity to the Flin Flon VMS mining camp.
Contemporaneously with the discovery and operation of the Tartan Mine in the 1980’s, limited exploration for gold, including drilling, was conducted until 1989. The property has seen limited gold exploration since.
Highlights of the historic drilling include high-grade results: 44.2 g/t gold over 2.5 metres, 68.9 g/t gold over 1.1 metres, 60.0 g/t over 1.1 metres and 595.2 g/t over 0.2 metres. Additional drill assays returned results comparable to the Tartan Mine, including 11.6 g/t gold over 3.8 metres, 7.7 g/t gold over 4.4 metres, 6.4 g/t gold over 2.4 metres and 12.9 g/t gold over 1.13 metres.
High-grade gold surface samples, with no follow-up drilling, returned 118 g/t gold and 53.5 g/t gold. Much of the project area remains underexplored, especially along the Tartan Shear Zone, which, to the east, hosts the Tartan Mine.
Potential to leverage future infrastructure investments over an expanded resource base, delivering enhanced economies of scale: potential to build a single process facility at the Tartan Mine and source ore from multiple areas along the contiguous Tartan Shear Zone, reducing the capital needed on a per-ounce basis should a decision be made to restart production and ability to access Tartan West mineralization in the future from current and planned Tartan Mine underground infrastructure.
Michael Swistun, CFA, President and CEO of Canadian Gold, commented, “We are very excited to have been able to work with Hudbay to secure the option to acquire the Tartan West property. The addition of the Tartan West property would double our land position over the Tartan Shear Zone from 8 to 16 km. We believe the addition of this property would significantly increase the scope and scale of exploration opportunities for the company. In time, we believe that additional high-grade resources that may be present on this property could deliver significant operational synergies that will bolster the already compelling economics for the restart of the Tartan Mine.”
Canadian Gold intends to begin the exploration work at the Tartan West property at the start of the 2025 field season. Initial work will consist of a detailed mapping, prospecting, and sampling program to evaluate and verify the historic high-grade surface showings, which will aid with prioritization of areas for additional work such as trenching, stripping and diamond drilling. The Option Agreement was structured in a way that allows the Company to complete a property-wide review to develop priority drill targets without incurring significant upfront costs.
Under terms of the option agreement and subject to approval of the TSX Venture Exchange, over five years Canadian Gold will be required to make the following cash and share payments to Hudbay and make the following work and exploration commitments outlined in Table 1 in order to exercise the option. Upon exercise of the option, Canadian Gold will hold a 100% interest in the Tartan West property and Hudbay will also be granted a 2.5% NSR on the Tartan West property. Under the terms of the option agreement, certain share payments listed below may be made in cash.
Upon start of earn-in period, Canadian Gold must issue to Hudbay 185,185 shares. At one-year anniversary, issue 555,555 shares and spend $100,000 on field work. At second anniversary, issue 1,111,111 shared and spend $250,000 on advanced field work. At third year anniversary, pay Hudbay $150,000, issue 1,296,296 shared and spend $800,000 on drilling. At fourth year anniversary, pay Hudbay $325,000, issue 3,148,148 shares and spend $1,500,000 on drilling. At fifth year anniversary pay Hudbay $350,000, issue 3,703,703 shares and spend $1,700,000 on a third drill program.