Kirkland Lake Gold (TSX: KL) has finalized an option agreement with respect to Wallbridge Mining’s (TSX: WM) Detour East property, located about 11 km east of the Detour Lake gold mine. The companies had previously signed a non-binding term sheet for a joint venture on the property.
During the initial five-year period, Kirkland Lake may acquire an undivided 50% interest in the Detour East property by funding phase 1 expenditures of C$7.5 million, with a minimum commitment of C$2 million in the first two years. It will also have the right to act as operator of the project.
Upon satisfaction of the option, the two companies will then form a joint venture (JV) on Detour East, with Kirkland Lake acting as the operator.
Kirkland Lake will have the right to acquire an additional 25% interest by incurring a further C$27.5 million within the first five years of the formation of the JV.
The Detour East project is part of the 739 km2 Detour-Fenelon gold trend land package that came with Wallbridge’s acquisition of Balmoral Resources. It covers over 20 km of the Sunday Lake Deformation Zone (SLDZ), a major east-west structure in the northern Abitibi greenstone belt.
The SLDZ structure is host to Kirkland Lake’s Detour Lake operations, now the second-largest gold mine in Canada with production of 659,000 ounces per year.