Canadian mining company North Peak Resources has signed a non-binding letter of intent (LOI) with Solarljos and Gullsil from Nevada, US, to acquire the Prospect Mountain Mine complex.

Located in the Eureka district, Nevada, the Prospect Mountain Mine complex is a 1,700-acre, elevated land with underground infrastructure.

The mine has four shaft complexes and nearly 11 miles (17.7km) of tunnels. Historically, mining operations at the site date back to 1872.

Until 1956, the mine is claimed to have yielded more than 100,000t with an average of 2.8oz per ton (oz/t) of gold, 56oz/t of silver and 13% lead.

North Peak plans to acquire the mine by issuing eight million shares of its company in two phases.

Five million shares will be issued in the first tranche, followed by a second tranche with three million shares.

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By GlobalData

The plan is to acquire 80% of the stake upon receiving the first tranche of shares, followed by the remaining 20% upon issuance of the second tranche.

The LOI also has terms through which North Peak and Solarljos and Gullsil will work towards a definitive agreement in respect of the acquisition.

It also set out that the companies have until 6 June 2023 to complete due diligence and determine the final structure of the acquisition.

In addition, it requires the company to pay a total of $385,000 in cash per year for each of the first three years after deal completion, and a 1% NSR royalty on production from the mine complex.

North Peak CEO Brian Hinchcliffe said: “The dual gold and base metal geologic systems and historic mining at the Prospect Mountain Mine complex offers the possibility of finding the high-grade mineralisation and reserves that would be required for profitable surface or underground mining given today’s capex and opex costs.

“As the long-time owners of Prospect Mountain through the Erickson Entities, Ty Erickson and Ari Erickson were seeking a group experienced in revitalising former mining complexes with modern exploration and we look forward to executing precisely those programmes in the exciting Eureka district.”