Canadian company Pistol Bay Mining has signed an option agreement with Northbound Capital to acquire a 100% right, title and interest in and to 104 mining cells in the Cabin Bay Township in Ontario’s Red Lake mining district.

The 5,264-acre Pakwash South property is located south-east of Great Bear Resources’ Dixie Lake gold discovery.

Pistol Bay president and CEO Charles Desjardins said: “We feel the recent discoveries by Great Bear will help focus attention on the gold and base metal potential of Pistol Bay’s Confederation Lake land package and the Red Lake Mining district as a whole.”

Under the agreement, Pistol Bay will pay $82,500 in cash to purchase a 100% right, title and interest in and to the property.

The company also plans to issue three million shares over a three-year period, subject to a 2% net smelter returns royalty to be retained by Northbound Capital.

Pistol Bay said in a statement: “Pistol Bay Mining shall have the right at any time to purchase one-half of the NSR royalty, being 1%, from Northbound Capital in consideration of the payment to Northbound Capital of $1 million, thereby leaving Pistol Bay with a 1% NSR royalty.”

The Pakwash South property is located close to old forestry access roads leading from provincial highway 105.

Earlier, the property comprised part of a large claim group known as the Goldpines and work in this part of the property was mainly geochemical, with lakewater surveys and extensive soil sampling for mobile metal ion (MMI) analysis.

The company is also planning to start a sampling work programme and prospecting on its Vanadium project in Nevada, US.