Kenorland options its O'Sullivan project to Sumitomo Metal Mining

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(Kitco News) - Kenorland Minerals (TSXV: KLD) announced Thursday that it has entered into a property option agreement with Sumitomo Metal Mining Canada pursuant to which the company has agreed to grant to SMMC the option to acquire up to a 70% interest in the O'Sullivan project in Quebec.

Pursuant to the option agreement, SMMC can earn an initial 51% interest in the project by incurring an aggregate of $4,900,000 in mineral exploration expenditures on or before the third anniversary of the option agreement (of which $1,200,000 are guaranteed expenditures within the first three years).

Kenorland said it will act as operator of the project in return for a management fee equal to 15% of the total expenditures during the first earn-in period.

The company added that following the earning of a 51% interest, SMMC has the option to earn an additional 19% (for a total of 70% interest), by delivering a NI-43-101 compliant feasibility study on the project disclosing mineral resources in the measured and indicated categories of not less than 1,500,000 ounces of gold (or AuEq) within an additional seven years.

The O'Sullivan project covers 27,595 hectares of mineral tenure within the Abitibi Greenstone Belt along the Casa Berardi Deformation Zone (CBDZ). The CBDZ is one of the primary structures that controls orogenic gold mineralisation in the belt.

The O'Sullivan project covers approximately 15 kilometers of strike length along the southern margin of the CBDZ where the deformation zone intersects volcanic rocks of the Stoughton-Roquemaure and Kidd-Munro assemblages.

Kenorland said that the systematic work performed by the company demonstrates the potential of the O'Sullivan project to host gold mineralization.

Kenorland Minerals' focus is early to advanced stage exploration in North America. The company currently holds projects in Quebec, Ontario and Alaska, where work is being performed under joint venture and earn-in agreements with third parties.