The companies intend now to flesh out definitive details of a transaction.

Madison is currently under an ‘earn-in with option to joint venture' agreement with Kennecott Exploration Company, part of Rio Tinto, signed last April. Kennecott is not a party to the letter of intent or the proposed transaction between APM and Broadway.

"The opportunity to acquire the fully-permitted, past-producing Madison copper-gold project will strengthen the portfolio with a porphyry/skarn project that has already been evaluated and transacted upon by a major," American Pacific CEO Warwick Smith said.

The exclusivity provisions of the preliminary agreement will lapse should Broadway's previously announced plan of arrangement with Mind Medicine not close.

Madison is in the heart of Montana's copper-gold belt and 38km east of the storied Butte Mining District.

The project is said to host high-grade Cadia-like (Australia) skarn over a porphyry system, covering about 1,020 hectares. Madison is permitted for mining, surface and underground exploration, and has two past-producing underground mines, Broadway and Madison.

Broadway produced 144,000oz gold from 1880-1950, while Madison was developed between 2005-2011 and generated 7,570oz gold and 3Mlb copper from bulk samples of 19,803 tons, for average grades of circa 0.52oz/t and 25% copper.

Broadway had sunk about US$20 million in the project for exploration and underground rehabilitation and development work, as well as the bulk sampling since 2005.

American Pacific shares (CSE:USGD) are trading about 40% below their year-earlier value at C7c, which is also near the 12-month low of 5c. They surged to a 12-month high of 31c in April last year following announcements of a joint venture with OceanaGold at its Tuscarora project in the historic Tuscarora Mining District of Nevada and soon thereafter its acquisition of the Gooseberry mine in Storey county, Nevada.

The company has a market value of about $4.4 million (US$3.34 million).