Toronto junior Columbia Metals (COL-V) has signed a definitive agreement to acquire the Lluvia de Oro gold mine, a former producer in Sonora state, Mexico.
Columbia is paying US$150,000 now and US$837,500 by closing to Chicago-based junior Tara Gold (TRGD-O). It will also pay another US$3.5 million to Tara by the end of 2008, and subject to regulatory approval it will issue Tara 1 million of its shares.
Tara keeps a 20% net cash flow interest, which Columbia can buy out for $5 million (in 1% bites, each to cost $250,000) within two years of the TSX Venture exchange approving the share issue.
Lluvia de Oro was an open-pit, heap-leach gold mine that produced 42,000 oz. gold between 1996 and 1998 under two operators, Great Lakes Minerals and Santa Cruz Gold. It was plagued by technical problems that led to low metal recoveries and high production costs.
Columbia reported a measured and indicated resource estimate of 2.4 million tonnes grading 0.64 gram gold per tonne on Lluvia’s Upper Zone, and 636,000 tonnes grading 0.72 gram per tonne on the Lower Zone. Inferred resources on the Upper Zone were pegged at 3.4 million tonnes grading 0.59 gram per tonne, and on the Lower Zone at 5.8 million tonnes grading 0.72 gram per tonne.
The leach pad at Lluvia is estimated to have 640,000 tonnes grading 0.53 gram per tonne still leachable.
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