Yet another explorer is trying their hand at 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, in the district’s southeast end. Citation believes the prospect is the “direct on-strike extension” of several nearby skarn deposits, though the prospect has seen limited exploration.
Citation must pay $20,000 cash after the deal is finalized, plus issue 1.05 million shares to Esperanza and spend $4 million in exploration. Esperanza will also nominate one Citation director and receive $10 per oz. gold once a bankable feasibility study is completed.
It was granted a 2% net smelter return royalty.
The option agreement is a shift for Citation, which optioned into the Eva Kitto nickel-copper prospect near Thunder Bay as its qualifying transaction in March. The company also changed its name from Attwell Capital and rolled back its shares 2.4-for-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.
In 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 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 other companies in the area advance their respective projects. Newstrike Capital (NES-V) continues to delineate a central breccia zone at its Ana Paula project. Torex Gold (TXG-T), meanwhile, brought in $83 million after exercising 63.9 million warrants to advance its El Limon project; Cayden Resources (CYD-V) raised almost $8 million and started drilling its Las Calles target; and Goldcorp‘s (G-T, GG-N) Los Filos mine became the largest gold mine in Mexico, with 335,000 oz. of production expected this year. The belt hosts over 15 million oz. gold resources.
Esperanza holds the Cerro Jumil project northeast of Torex Gold and Goldcorp. Cerro Jumil 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 US$122-million net present value and a 26% internal rate of return, 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.
terrible reporting.. i expected more form NM
redzone symbol is REZ
Newstrike project is called ANA PAULA