Pacific Ridge Exploration Ltd. [PEX-TSXV, PEXZF-OTCQB] said Wednesday it has amended the terms of an agreement that gives BMC Minerals Ltd. an option to purchase Pacific Ridgeâ€™s Fyre Lake property in the Canadian Yukon.
Pacific Ridge shares advanced on the news, rising 4.3% or $0.015 to 36.5 cents on volume of 237,260. The shares are currently trading in a 52-week range of 36.5 cents and $0.05.
BMC is a private United Kingdom-based resource company that is developing the Kudz Ze Kayah volcanogenic massive sulphide (VMS) project in south east Yukon. The project is expected to operate for a minimum of 10 years, producing high grade zinc, copper, and lead concentrates with significant gold and silver credits.
The Fyre Lake project, which is located in the Finlayson Lake area of the Watson Lake Mining District in southeast Yukon, is owned 100% by Pacific Ridge. The property covers 3,352 hectares and hosts â€œBesshi-typeâ€ copper-cobalt-gold volcanogenic mineralization.
The potential of the Finlayson Lake Camp was recognized in the mid-1990s via the discovery of the Kudz Ze Kayah VMS deposit 30 kilometres north of Fyre Lake and the Wolverine VMS deposit 30 kilometres northeast of Fyre Lake.
Exploration to date has partially drilled-defined the Kona massive sulphide deposit as well as two additional targets with potential for additional VMS deposits.
The Kona Deposit is estimated to contain an indicated mineral resource of 3.57 million tonnes of grade 1.57% copper, 0.10% cobalt, and 0.61 g/t gold at a 1.0% copper cut-off grade. On top of that is an inferred resource of 5.36 million tonnes grading 1.48% copper, 0.08% cobalt and 0.53 g/t gold. It is worth noting that low-grade zinc and silver assays were not included in these estimates.
On January 18, 2017, Pacific Ridge closed an option agreement with BMC Minerals, giving the U.K. company the option to acquire a 100% interest in Fyre Lake. Under that agreement, BMC was granted two options whereby its pledged to make payments of $2.2 million in the case of a one-year purchase option, or in two-years by paying $300,000 in January, 2018, and $2.42 million two years after closing.
In addition, if the option was exercised, BMC agreed to make a bonus payment of $1 million if and when BMCâ€™s Kudz Ze Kayah property achieved commercial production for one year. BMC paid a refundable deposit and initial option payments of $375,000 ($25,000 in November, 2016, and $350,000 in January 2017) and an interim payment of $1.2 million in December 2018.
However, in April 2020, Pacific Ridge said the payment schedule had been re-negotiated. Previously, the final payment to Pacific Ridge of $1.22 million was due upon BMC obtaining production financing for Kudz Ze Kayah, but no later than December 31, 2020.
As renegotiated, BMC paid $250,000 to Pacific Ridge on April 2020, and agreed to pay $1.2 million within BMC receiving a Type A Water license for the development of its proposed ABM Mine (at Kudz Ze Kayah), but not later than December 31, 2021.
However, on Wednesday, Pacific Ridge said that under the re-negotiated deal, BMC has paid $250,000 to Pacific Ridge and will pay $850,000 by December 31, 2022, or within 10 business days of BMC listing on an internationally recognized stock exchange, whichever comes first.
Under the newly renegotiated deal, BMC will continue to pay $75,000 to Pacific Ridge every six months until the final payment of $850,000 has been paid, with the next payment due on June 30, 2022.