(Reuters) - Canada's Abbastar Resources Corp said it had signed a deal that will give it the option to acquire an 100 percent interest in Denison Mines' Talbot Lake gold project in northern Ontario.
Sharesof Abbastar Resources fell 17 percent to 25 Canadian cents, while thoseof Denison Mines were up nearly 10 percent at C$2.25 in Tuesdayafternoon trade on the Toronto Stock Exchange.
Under the deal,Abbastar said it may earn an initial 70 percent stake by incurringexpenses of $4 million over five years. Abbastar may opt to earn anadditional 30 percent stake by paying $250,000 and expending anadditional $3 million on the project on or before September 30, 2017.
IfAbbastar elects not to earn the additional 30 percent, a 70-30 jointventure of Abbastar and Denison will be formed and governed by acommittee comprising two people from each company.
"Acquiringsuch a significant high grade gold asset in this strong precious metalmarket bodes well for the future of Abbastar," Chief Executive JohnGood said in a statement.
"Given the strong market demand forgold, the Talbot Lake gold project has become a very important andvaluable asset in the growth of Abbastar," he added.
The TalbotLake project, which is located within the gold producing UchiSubprovince of northwestern Ontario, has produced in excess of 40million ounces of gold, Abbastar said.
(Reporting by R. Manikandan in Bangalore; Editing by Maju Samuel)
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