Calgary-based exploration company Argyle Resources has entered into an option agreement with Metallic Minerals Corporation to earn a 100% interest in the McKay Hill property, in Canada’s Yukon region.

The area is prospective for high-grade silver, lead, zinc, gold and copper covering 55 km².

Metallic Minerals says the property contains at least 16 identified vein structures with mineralisation similar to that of the nearby Keno Hill mines.

McKay Hill is a historic high-grade producer that shows potential to host a significant district-scale vein system. Between 1948 and 1949, a company called East Bay Gold produced 143 t of high-grade material at McKay Hill, with silver grading 390 g/t and lead grading 74.1%.

Acquiring the McKay Hill property marks an exciting new chapter for Argyle as it expands into the Yukon region – one of Canada’s most storied and prospective mining districts.

Argyle CEO Jeff Stevens says this is a rare opportunity to advance an under-explored project in a jurisdiction that has a long history of significant mineral exploration activity.

“We see strong potential at McKay Hill, and our team is eager to apply modern exploration techniques to expand on the previous work completed by Metallic. This acquisition fits squarely within our strategy of assembling a portfolio of high-quality assets in established mining regions,” he adds.

The agreement between Argyle and Metallic stipulates that Argyle will have three years to exercise the option, during which time it must provide $75 000 of cash and $150 000 worth of equity (common shares) on signing, followed by cash spends of $75 000, $100 000 and $200 000, respectively, in years one to three, coupled with equity issuances of $100 000, $150 000 and $200 000, respectively, each year.

Should Argyle exercise its option and gain full ownership of McKay Hill, the property will be subject to a 3.5% net smelter return royalty, with 2% of the aggregate net smelter return being subject to a buy-back right by Argyle, such that 1% of the royalty may be repurchased for the price of $300 000 and the second 1% may be repurchased for $1.2-million.

Argyle also owns 100% interests in the Pilgrim Islands, Matapédia, Lac Comporté and Saint Gabriel quartzite silica projects, in Québec, and an option agreement for the Clay Howells rare earths project in Ontario.