The road accessible DD Property is close to rail, power and a local workforce, and is located approximately 35 km southwest of Cranbrook, British Columbia. The property is comprised of the DD claims, 440 ha of land, that PJX optioned from Doug Anderson (50%) and David Pighin (50%), and the DD Extension Claims, 1900 hectares (ha) of land owned by PJX. In 2016, PJX granted Teck Resources Limited (Teck) an option to acquire up to a 75% interest in the DD property (see terms below).
The DD Property is also located approximately 120 km east of Teck’s Trail Metallurgical Complex that produced some 8 million tonnes of zinc, 9 million tonnes of lead, and over 285 million ounces of silver from processing Sullivan Mine concentrate. The Sullivan Mine produced concentrate for over 90 years before being closed in 2001.
The DD Property occurs within a sedimentary basin called the Panda Basin that is geologically similar to the Sullivan Basin hosting the Sullivan deposit located about 45 km to the north. The Company believes that the DD Property has similar potential to the Company’s Vine and West Basin Properties for hosting a Sedex deposit. Historical drilling (L80-1, IR07-1) by other companies proximal to the DD Property intersected zinc-lead mineralization at the same time horizon that the Sullivan Sedex deposit was formed. The historical mineralization combined with the Company’s new insight on geological controls for mineralization on PJX’s Vine Property supports the potential for a Sedex type deposit on the DD Property. Mineralization at the Vine and West Basin Properties appear to be spatially associated with the synsedimentary Moyie fault structure. The Company believes that the Moyie fault is similar to the synsedimentary Kimberley fault that was important in controlling zinc-lead-silver mineralization at the Sullivan Deposit. The Sullivan time horizon target is estimated to be about 900m to 1200m deep on the DD Property. Only one hole has been drilled on the property and it was not drilled deep enough to test the target horizon.
Teck has completed a Magnetotelluric (MT) geophysical survey. The MT survey carried out by Quantec Geoscience for Teck has defined a MT anomaly that appears to coincide with the anticipated depth of the Sullivan horizon. The MT survey consisted of two 4 km long, widely spaced (700m apart) east-west oriented lines carried out to assess the Panda Basin at depth and a third perpendicular line to assess the location and dip of the regional synsedimentary Moyie fault. Readings were taken at 200 m intervals. The 2 parallel MT lines define an anomaly that is open to the north and south.
Teck is assessing the MT target for drilling and is in the process of applying for the relevant permits.
Terms of the Teck Option Agreement (the “Agreement”)
The Option Agreement provides for Teck to earn an interest in the property as follows:
Stage 1: Teck has an initial option to earn a 51% interest in the DD Property by incurring $4 million of Expenditures (as such term is defined in the Agreement) by January 31, 2021 (the “First Option”).
Stage 2: Teck may elect to earn an additional 24% interest in the Property, thereby increasing its interest to 75%, by incurring an additional $4 million of expenditures by January 31, 2024 (the “Second Option”).
Provided that Teck has exercised the First Option, a joint venture (the “Joint Venture”) shall be deemed to be formed on the date (the “Participation Date”) upon which the earlier of the following occurs: (i) Teck declines or advises that it is no longer pursuing the Second Option; (ii) Teck delivers a notice to PJX notifying PJX of the exercise of the Second Option; or (iii) January 31, 2024. If either party elects to not participate in the Joint Venture their interest may be diluted on a pro rata basis to a 5% Net Profits Royalty.