Cambior buys stake in Zappa

With financing in place, exploration will finally begin in earnest on a portfolio of Ecuadorean gold properties assembled more than three years ago by Zappa Resources (ZPA-V).

Cambior (CBJ-T) has agreed to acquire a 10% interest in Zappa by subscribing for 2.3 million units of the junior at a subscription price of 65 cents each. A unit consists of one common share and one common share warrant at an exercise price of 78 cents.

Proceeds, totalling $1.5 million, will be used to drill and develop Zappa’s prospects in the Ponce Enriquez gold camp of southwestern Ecuador.

The major can earn a 60% interest in Zappa’s stake in any existing properties, with the exception of La Plata, in exchange for completing a bankable feasibility study.

The study must be completed within two years of the close of the agreement or of Zappa’s expenditure of US$2 million on the property, whichever comes first.

Zappa secured a major land position in Ecuador’s emerging gold regions more than three years ago by acquiring Prominex, an Ecuadorean exploration company. The package included the Papa Grande and Mollopongo concessions in the Ponce Enriquez camp.

But the junior could barely afford to maintain the land holdings, let alone launch a major drill program in the area, says Albert Gerry, Zappa’s chief financial officer.

The company got a boost last year, however, when Ecuadorian Minerals (EMC-T) agreed to earn a 51% interest in the Guadalupe property adjoining its Gaby deposit and Cambior optioned the Plata property in northern Ecuador.

Now Cambior, currently drilling on Plata, will supervise exploration for bulk-tonnage gold deposits on Zappa’s Ponce Enriquez package. The major is expected to move two rigs to Mollopongo and Papa Grande as soon as possible.

The two concessions lie due south of the Gaby-Gaudalupe gold-copper system, where Ecuadorian has outlined a resource of 3.5 million oz. Gerry says Zappa is excited by the potential for Mollopongo and Papa Grande, since the mineralized zone that hosts Gaby appears to become richer and wider to the south.

Limited drilling at Papa Grande last year returned 189 metres grading 0.31 gram gold per tonne and 36 metres grading 0.09 gram gold, while samples from underground workings averaged 1.65 grams over a length of 62 metres.

Under the deal, Cambior can earn a 60% interest in any new property staked by Zappa by spending US$2 million over three years on that property. Ground acquired from third parties is subject to a 60% earn-in agreement.

New appointments to Zappa’s board of directors will include one Cambior representative and two independant members from the mining industry.

The deal is subject to a due diligence period, approval by Cambior’s board of directors, agreement by Yorkton Securities to waive its right of first refusal on the private placement, and regulatory approval.