Ventana settles La Bodega dispute (June 07, 2010)

VANCOUVER — Ventana Gold (VEN-T) has announced the settlement of an ownership dispute at its La Bodega gold project in northeastern Colombia as it continues to pull very high-grade intercepts from the property.

For US$48 million the company has secured all mineral and key surface rights on its flagship La Bodega property as well as rights on the adjacent La Baja property, and all equipment, facilities and easements on both properties.

In December, ownership had been thrown into doubt after the landowners that Ventana was optioning the property from, launched a lawsuit to invalidate the option agreement. Minera La Bodega, the private Colombian owners, argued the agreement did not meet Colombian laws after Ventana started pulling long and high-grade gold intercepts from the property.

The two sides, along with privately- held Minera De La Baja, have now reached a compromise.

“We’ve been confident all along that it would be resolved in our favour,” said Stephen Orr, chief executive of Ventana in a conference call. “We’re obviously extremely pleased to have put it behind us.”

The settlement, including La Baja, gives Ventana a contiguous land position of 2.1 km along a prolific mineralized trend. Orr said the company has been in discussions to buy the La Baja property for some time, and emphasized its importance.

“La Baja is strategically important for Ventana because we’re confident that the La Mascota zone trends right across this package of mineral rights, and our Las Mercedes zone also appears to trend into La Baja,” said Orr.

The company continued to explore the La Bodega property while the legal dispute was being settled, with recent results expanding mineralization along strike and down depth. Ventana has no less than nine drill rigs on site, with seven turning at La Mascota and two at La Bodega, and it plans to add more.

“We are only beginning to realize the spectacular mineralization endowment that exists in this prolific district,” said Orr.

Hole 207, on the El Cuatro property, returned 38 metres grading 10.38 grams gold per tonne, 45.29 grams silver per tonne and 0.17% copper. The hole was cut 600 metres southwest of the main La Mascota zone, and 100 metres southwest of the previously reported hole 187, which cut 37 metres averaging 5.61 grams gold, 65.43 grams silver and 0.41% copper.

Infill drilling at La Mascota included hole 180 that cut 52 metres carrying 5.92 grams gold, 35.58 grams silver and 0.28% copper, and hole 202 that hit 41 metres averaging 5.69 grams gold, 36.21 grams silver and 0.26% copper.

The company believes the La Bodega mineralization might plunge underneath or connect to the La Mascota zone at depth, and is drilling to test these theories.

The latest results from La Bodega include the highest gold grades yet found in the area. Hole 203, drilled on the southwest end of La Bodega, hit 151 metres grading 16.75 grams gold, 4.46 grams silver and 0.06% copper from 93 metres and included a 4.8-metre section grading 443.78 grams gold. Hole 217, drilled on the northeast boundary, cut 71.4 metres averaging 7.2 grams gold, 38.7 grams silver and 0.8% copper from 226 metres.

Orr said the company is focusing its efforts at La Bodega before moving on to the Las Mercedes zone.

“We would like to be drilling Las Mercedes now, but the depth potential of La Bodega is so intriguing that we’ve put that as a higher priority,” said Orr.

The company plans to start drilling on the newly-acquired La Baja property as soon as the deal in finalized. Orr said the company was very anxious to get in there and begin drilling.

In the fourth quarter the company plans to start driving a 200- metre exploration decline into the La Mascota mineralization. The tunnel will allow for bulk sampling for metallurgical work and open up underground exploration work to define the mineralization at greater depth.

Ventana has already completed some metallurgical work from La Mascota with favourable results. Recoveries of 86% of the gold, 93% of the silver and 83% of the copper were achieved using gravity concentration, flotation and a carbon-in- leach circuit.

The company expects a scoping study for the project to be complete by late June. Orr said the company would then move directly in to a feasibility study, skipping the prefeasibility because so much technical work is being put into the scoping study.

The money for the US$48-million settlement came from a US$20- million loan from Ventana insiders, the terms of which were cleared through an independent committee of the board, and from current cash. When the settlement was announced the company had $38 million on hand.

Since announcing the settlement the company boosted its cash reserves by entering into a $20.7-million private placement with Silver Wheaton (SLW-T, SLW-N). As part of the deal the silver streaming company will have right of first refusal on any silver Ventana decides to stream from Colombia.

Ventana will sell 1.8 million units at $11.50 apiece, with each unit consisting of one share and half of a warrant. Silver Wheaton can buy one share for each full warrant at $15 up to a year after the deal closes. Before the deal, Ventana had 97 million shares outstanding.

The company has also clarified that it is not affected by the recent reforms to the existing Colombian mining code relating to the Paramo ecosystem.