Agnico-Eagle buys 18.6% of Mexico-focused Colibri

Major Canadian gold miner Agnico-Eagle Mines (AEM-T, AEM-N) has acquired 6 million shares and 4 million warrants of Colibri Resources (CBI-V), a junior explorer based in Nanaimo, B.C., looking for gold and polymetallic mineralization in northwestern Mexico’s Sonora State. It bought the shares at 20¢ each for a total $1.2 million in two private placements.

The purchase comes as part of a newly signed option agreement. Agnico-Eagle can earn up to 75% interest in Colibri’s eponymously named gold project, which hosts several dozen historical artisanal mine workings. To earn its interest, Agnico-Eagle must spend US$3 million on exploration over the next three years, complete a positive feasibility study within five years and make option payments totalling US$1.45 million over seven years.

The project is in the northern Sonora gold belt, home to 14 known gold deposits occurring along the northwest-trending
Mojave-Sonora megashear, a major Late Jurassic continental-scale transform fault analogous to the modern-day San Andreas Fault. Fifty kilometres along strike of Colibri is one of Mexico’s largest gold mines, La Herradura, operated jointly by Newmont Mining (NEM-N, NMC-T) and Mexican miner Fresnillo (FRES-L). Even closer is the El Chanate mine, formerly operated by Capital Gold before its recent purchase by Gammon Gold (GAM-T, GRS-N), as well as Timmins Gold‘s (TMM-T) San Francisco mine. Both mines are a few dozen kilometres from Colibri’s borders. The Noche Buena gold mine being developed by Fresnillo is also 20 km to the northwest.

Agnico-Eagle has one producing gold mine in Mexico, Pinos Altos, in neighbouring Chihuahua State. Commercial production at the open-pit mine began in late 2009, with 131,097 oz. gold poured in 2010 at an average cash cost of US$425 per oz.

Colibri Resources has been exploring its main gold project as well as two nearby polymetallic projects since acquiring them and listing in 2005. Exploration shut down during 2009 and 2010, after the financial crisis forced the company to conserve cash and stop drilling. So far this year it has made good progress toward restarting serious exploration work. The company signed an initial letter of intent with Agnico in December 2010, started a 2,000-metre drill program at its Ramard copper-zinc-silver project in March and closed the deal with Agnico in late May. 

At Ramard’s La Bronca zone, recently released assays for the first 10 of 28 holes completed this year returned three metres of 741.7 grams silver per tonne, 5.79% lead and 10.52% zinc 18 metres below surface. The company’s third project is a nearby silver-molybdenum prospect called Leon. Colibri says all three encompass former producing mine camps in excess of 30 sq. km each, noting none of the camps have been explored by other companies using modern geological or geophysical methods.

Colibri’s president and CEO is Nanaimo-based Lance Geselbracht, a registered civil engineer in Washington State whose work experience lies in heavy civil construction and environmental remediation. He serves as president of one other company,
Nanoose Bay Estates, a private land-development company on Vancouver Island. Also in the home business is Colibri’s chief
financial officer, William Walker, a self-employed mortgage consultant in Nanaimo. 

Heading up exploration is Jonathan Nourse, Colibri’s vice-president of exploration and a full-time geology professor at California State Polytechnic University. Joining him as manager of exploration with a PhD in geology is James Irwin, a founding director of the company.

Director Roger Doucet joined the company in 2007. He has been Agnico-Eagle’s exploration manager in Mexico since 2006, with responsibilities that include overseeing exploration at the company’s Pinos Altos mine.

According to insider trading reports filed on SEDI, none of the listed directors or officers own much stock. CFO Walker owns the most, with 165,000 shares bought over five years ago, while president Geselbracht owns 132,500 shares, as well as options to buy 525,000 more between 10¢ and 26¢.

Shares of Colibri have nevertheless risen steadily from 15¢ in January 2011 and 4¢ in July 2010. On June 21, they closed at 27¢.