In a reverse-takeover,
The Denver-based private group will assume control of the Toronto-based junior through an exchange of Castle shares for Santa Cruz shares. As a result, Castle Exploration will retain a 20% interest in Santa Cruz after the transaction is complete and Castle’s Chris Davie and Dorian Nicol will become president and executive vice-president, respectively, of Santa Cruz.
Castle’s interest in Santa Cruz was piqued by the Magistral gold project in Mexico. The project, situated in northern Sinaloa state, contains 800,000 oz. gold, according to Santa Cruz.
“We believe that Magistral has the potential to become an unusually low-cost producer,” says Davie, “and it will be the primary focus of Santa Cruz’s activities over the next few months.”
Santa Cruz also owns the Lluvia de Oro mine in Sonora state, which was shut down earlier in the year. The transaction with Castle resolves an outstanding dispute with the contract miner at Lluvia de Oro. Under a settlement agreement, Santa Cruz will pay D.H. Blattner & Sons US$360,000 in cash, provide a US$400,000 note convertible into 4 million shares of Santa Cruz, and commit to buy equipment from Blattner for use at the Magistral project.
Among Castle’s properties is a 50-sq.-km Ceibo gold project in Belize. The junior is earning an 80% stake in that property from
Depending on the availability of cash, the company could drill the property between February and July. BHP retains a back-in right for a 51% interest.
Castle is also conducting grassroots exploration in Africa, where its target is epithermal mineralization along the rift areas of Malawi and eastern Zambia.
The transaction involving Santa Cruz and Castel is scheduled to close at the end of January.
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