Vancouver – Yet another explorer has decided to try their hand in the Guerrero Gold Belt of southwest Mexico, with Citation Resources (CTT-V) signing an option agreement on a block of property there.
The company has secured the right to earn 100% of Esperanza Resources‘ (EPZ-V) 380-sq.-km Biricu prospect, which sits at the southeast end of the district. Citation stated that it believes the prospect is the “direct on-strike extension” of several skarn deposits in the area, though the prospect has so far seen very limited exploration.
Citation must pay $20,000 cash upon finalization of the deal, plus over four years issue 1.05 million shares to Esperanza and spend $4 million in exploration. Esperanza will also nominate one Citation director, was granted a 2% net smelter return royalty, and is to receive payment of $10 per oz. gold once a bankable feasibility study is completed.
The option agreement is a shift for Citation, which optioned into the Eva Kitto nickel-copper prospect in the Thunder Bay mining district as its qualifying transaction in March. At the time, the company also changed its name from Attwell Capital and rolled back its shares 2.4 to 1.
In July the company saw a change in management, with Matthew Watson coming on as a director and CEO. Watson has served on the board of Redzone Resources (REZ-T) and the Victoria International Airport Authority, and was COO of Carmanah Technologies from 2003 to 2006. At the same time James Harris, chairman of Entree Gold (ETG-T) came on as a director.
As of late August the company had $630,000 in net assets and was required to spend $250,000 by March 2012 on the Eva Kitto project. The company has 30 million shares outstanding.
Citation’s share price jumped 7.5¢ or 71% on the deal to end at 18¢ with 2.5 million shares traded. The somewhat sparsely traded company briefly traded at a high of 50¢ at the beginning of its restructuring, while it hit a low of 7¢ in October.
Citation’s involvement in the district comes as others in the area continue to advance their respective projects. Newstrike Capital (NES-V) continues to delineate a central breccia zone at its Ana Paula project, releasing more results on the same day Citation announced its move. Torex Gold (TXG-T), meanwhile, recently brought in $83-million through the exercise of 63.9 million warrants to advance its El Limon project, Cayden Resources (CYD-V) recently raised almost $8-million and started drilling its Las Calles target and Goldcorp‘s (G-T, GG-N) Los Filos mine is currently the largest gold mine in Mexico with 335,000 oz. of production expected in 2011. Overall the belt currently hosts over 15 million oz. of gold resources.
Esperanza itself holds the Cerro Jumil project that sits northeast of Torex Gold and Goldcorp. The Cerro Jumil project hosts 34.4 million measured and indicated tonnes grading 0.83 gram gold and 1.8 grams silver for 913,000 oz. gold and 1.95 million oz. silver. The company completed a preliminary economic assessment on the project that outlined a 103,000 oz. per year open-pit heap leach operation with a net present value of US$122 million and an internal rate of return of 26% based on a 5% discount and US$1150 per oz. gold.
A previous version of this story erroneously referred to Newstrike’s project as the Santa Ana project.
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