Red Lake Gold’s (CSE: RGLD) shares soared on Wednesday after Barrick Gold (TSX: ABX; NYSE: GOLD) announced it had signed agreements with the company and Dixie Gold (TSXV: DG), both of which have gold projects in the Red Lake district, in northern Ontario.
Investors flocked to Red Lake, pushing the stock up as much as 100% to 27 Canadian cents around midday ET. It was still trading close to a six-month high of 28 Canadian cents at 2:00 pm ET, when it was changing hands a 26 cents. That leaves the exploration company with a market capitalization of C$7.3 million ($5.8m).
The Vancouver-based explorer granted Barrick the right to earn in on its Whirlwind Jack gold project near the town of Red Lake. Barrick will also act as operator.
To earn a 70% interest in Whirlwind Jack, Barrick has agreed to spend at least $4 million for exploration within four years, with $500,000 to be spent in the first 12 months. Barrick has also agreed to deliver an initial resource estimate that includes at least 500,000 oz. of contained gold. If Barrick successfully completes the earn-in, the two companies plant to create a joint venture, with Red Lake Gold holding 30%.
The same terms apply to Dixie Gold’s Red Lake project.
Dixie Gold opened 35% higher at 0.30 Canadian, before giving up some of those gains. The miner market capitalization is C$6.82 million.
Both projects in which Barrick will be earning interests are contiguous with Great Bear Resources’ (TSXV: GBR; OTC: GTBAF) Dixie gold project 24 km southwest of the town of Red Lake. The Whirlwind Jack property is on the west, and the Red Lake property is on the northeast.
Red Lake Gold and Dixie Gold share a management team headed by chairman and CEO Ryan Kalt.
(This article first appeared in the Canadian Mining Journal)