Vancouver — Having made the initial $250,000 payment required for the purchase of the Salamandra gold project in Mexico, National Gold (NGT-V) is moving ahead with a scoping study on the high-grade Estrella zone.
“The company’s focus has shifted from acquisitions to partnering with a quality operator to joint-venture production from the low-cost, high-grade Estrella gold zone,” says Albert Matter, National Gold’s CEO. “We are working to select the operator to provide the cash to build the company while joint-venturing the exploration of the other six gold-bearing properties.”
The junior took over the advanced project late last year from Placer Dome (PDG-T) and Kennecott Minerals. The $10.5-million deal was originally slated to close at the end of February. However, regulatory hurdles forced National Gold to bump the date ahead to mid-March. Financial problems then resulted in a second extension, forcing Placer and Kennecott to defer $2.75 million of the closing payments to July and to agree to pay the $1.6-million refundable IVA tax. This enabled National Gold to close the deal.
On the back of the acquisition, National Gold had hoped to raise $5.2 million, but poor market conditions prompted the junior to close a $750,000 interim financing.
The private placement originally consisted of 8 million special warrants priced at 65 each. The closing financing included 3 million special warrants at 25 each. A special warrant includes one share and half a purchase warrant exercisable at 35 for one year. The junior is re-pricing the balance of the financing.
The Canadian Ventures Exchange has requested that National Gold complete a $1.6-million financing before July 15 and a second financing for an additional $2 million by Aug. 30. If these obligations are not met, the company may run afoul of the exchange’s maintenance requirements and be downgraded to inactive trading status. National Gold says it is confident it can raise the funds.
The 151-sq.-km property is 400 km south of Tucson, Ariz., in the Mexican state of Sonora. It hosts the 3.4-million-oz. Mulatos gold deposit. Within the deposit is a high-grade core, dubbed Estrella, that holds a measured and indicated resource of 11.5 million tonnes grading 3.16 grams per tonne using a 2-gram-per-tonne cutoff grade. National Gold has hired Nevada Mining Consultants and Mintec to prepare a scoping study for production from the high-grade zone.
Since 1993, Placer and Kennecott have spent more than $50 million on exploration at the property. Based on a cutoff grade of 0.8 gram gold per tonne, a 1997 feasibility study pegged the measured and indicated resource at 68.3 million tonnes grading 1.57 grams gold.
A 1999 feasibility study envisioned a 17,500-tonne-per-day open-pit operation. Capital costs are pegged at US$120 million. Operating costs for the heap-leach operation are estimated to be $5 per processed tonne at a gold recovery rate of 66%.
Mineralization is hosted in a large, high-sulphidation gold system, which is found preferentially stratabound in felsic volcaniclastics and porphyritic flows. Alteration is well-zoned, extending from a gold-bearing core of silicic and pyrophyillite clays to kaolinite-illite-dickite clays and finally to a propylitic zone.
Under the deal, $3 million is payable in the first year. The remaining $7.5 million is secured by a debenture and is payable at the end of the fourth year. The debenture carries a 7% interest, which is payable semi-annually. The vendors retain a 2% net smelter royalty on the first 2 million oz. gold produced.
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