Darnley Bay to buy Tamerlane's Pine Point mine property

Darnley Bay Resources Ltd. has a deal in the works to buy the defunct Pine Point lead and zinc mine east of Hay River, N.W.T.

The company signed a bindingletter of intent to buy the claims from the receiver that took them over from TamerlaneVenturesfor $8 million in cash and shares.

Tamerlane had tried to restart the mine in the 2000's, but failed due in part to low global metal prices.

• Pine Point plans spelled out by new owners
• TamerlaneVentures could lose assets to creditors

Mineral prices have since rebounded, and with it, the fortunes of the mine.

"The economy for the base metal mining market at that time was very poor," says Kerry Knoll, DarnleyBay's director and chairman.

"It's much better now."

Experience in the territory

His company has been working on developing the DarnleyBaysite near Paulatuk for years, but has not been able to raise the capital to fund it. Knoll says restarting Pine Point could be a "springboard" to getting that other project moving.

To that end, he says, it helps that there are already proven resources in the ground.

"When Cominco left in the late 1980s, they left a number of deposits behind that they considered too low grade, and they had other projects to mine instead," says Knoll.

"Leaving them behind gives us a relatively good head start towards building a mine."

According to a news release from Darnley Bay,"the former producing Pine Point assets contain 42 known zinc-lead deposits over a strike length of approximately 68 kilometres."

The next step, says Knoll, is consulting with communities such asHay River and First Nations, as well asthe territorial government. After that he estimates a feasibility study will take about two years, and if all goes according to plan the company will start to raise money for themine.

According to the news release, the sale is still subject to "certain closing conditions, including approval of the Ontario Superior Court of Justice and of the TSX Venture Exchange."