Goldstrike shares down on Newmont decision

Drilling the Goldstack Zone at the Plateau Project, Yukon. Source: Goldstrike Resources Ltd.

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Drilling the Goldstack Zone at the Plateau Project, Yukon. Source: Goldstrike Resources Ltd.

Goldstrike Resources Ltd. [GSR-TSXV] on Friday January 25 said that  Newmont Mining Corp. [NEM-NYSE] has elected to drop its option to earn an interest in Goldstrike’s 100%-owned Plateau property in the Canadian Yukon.

Investors reacted to the news by sending Goldstrike shares down 14.3% or $0.01 to $0.06 on volume of 738,109. The 52-week range is 25 cents and $0.05.

Back in March, 2017, Goldstrike revealed that had agreed to form a strategic alliance with Newmont Mining, the U.S. mining giant that ranks among the world’s largest gold producers. Under an agreement, Newmont had the option to invest $53 million in Goldstrike and its Plateau project. The deal gave Newmont the right to earn up to a 75% interest in the property.

At the time, Newmont agreed to buy 12.7 million Goldstrike units at $0.47 per unit, at a cost of $6 million.

Plateau has been described as a newly discovered gold system, covering 350 km2, and containing high-grade mineralization. The company has a second property – the Lucky Strike – which is located in the heart of the Yukon’s White Gold District.

The work completed at Plateau in 2018 included 26 drill holes totalling 7,753 metres of diamond drilling, 310 rock grabs and 1,377 soil samples, five kilometres of ground geophysical surveying and extensive property-wide mapping and prospecting.

The drill holes were focused on geologic and geophysical targets to gain a better understanding of controls on the widespread gold mineralization seen at surface along the 70-km Yellow Giant trend. Ten of the drill holes were successful in intersecting gold mineralization in excess of 0.5 g/t gold, with intercepts of up to 7.17 g/t gold over 0.85 metres at the Golden Dome area.

No significant gold mineralization was returned in other drill holes.

“We would like to thank Newmont for its investment and collaboration in sharing its technologies and knowledge with Goldstrike over the past two years,” said Goldstrike President and CEO Terrence King.

“Although the Plateau Project currently may not meet the corporate thresholds at Newmont, the extensive databased indicates this district-scale system remains a highly prospective exploration asset in a top-tier jurisdiction,” King said. “With plenty of working capital and no debt, Goldstrike remains well positioned for the future.”

With a US$1 million cash payment scheduled to be made by Newmont in December 2018, the company previously said it will be well funded with non-dilutive working capital to continue working for the net benefit of all shareholders.

Newmont recently agreed to merge with Goldcorp. [G-TSX; GG-NYSE] in an all-stock deal worth $10 billion.

The combined company, called Newmont Goldcorp, will have operations in the Americas, Australia and Ghana, producing between 6.0 million and 7.0 million ounces of gold annually.

That would make the largest gold producer globally by some distance.

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