Guadalupe de los Reyes, MEXICO

 

Guadalupe de los Reyes is a gold and silver project comprised of 6,302 hectares and located in the Sierra Madre Range in Sinaloa, Mexico.  This historic mining district, dating back to 1772, has produced over 600,000 ounces of gold and 40 million ounces of silver.

 

The project is currently 100% owned by Vista Gold Corp.  On January 16, 2014 Cangold announced a signed Letter of Intent whereby Cangold will be granted an option to acquire from Vista up to a 100% interest (subject to certain underlying royalties) in the mining rights to the Guadalupe de los Reyes Project.

 

The historic workings at Guadalupe de los Reyes occur in a low sulfidation vein system that extends over one kilometer in strike length and at least 400 metres down dip with open mineralization and the potential for higher gold and silver grades at depth.

 

A Preliminary Economic Assessment (“PEA”) carried out on the project by Tetra Tech for Vista in 2013 estimated an Indicated resource of 6.8 million tonnes at a grade of 1.73g/t gold and 28.71g/t silver (380,100 oz gold and 6,315,300 oz silver) as well as an Inferred resource of 3.2 million tonnes at a grade of 1.49g/t gold and 34.87g/t silver (155,200 oz gold and 3,639,000 oz silver).  Cangold is considering the resource in the PEA to be a historical estimate as Cangold's qualified person has not done sufficient work to classify the estimate as a current mineral resource for Cangold, as per NI 43-101 requirements. (Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.  A copy of this report is available on SEDAR under Vista’s profile.)

 

The 2013 PEA envisaged an open pit operation, while Cangold is considering a combined open pit and underground approach with a higher grade.  Following the signing of a formal Option Agreement, the Company plans to undertake a complete review of all previous work, conduct additional baseline studies, diamond drilling, and advance the project to the pre-feasibility stage.

 

Terms of the option call for Cangold to pay to Vista a total of US$5,000,000 in staged payments over three years (a total of $1,000,000 in the first year) in order to acquire a 70% interest in the project. Cangold may then purchase the additional 30% by making a positive production decision and paying to Vista US$3,000,000 plus an escalator payment based upon the price of gold and the number of NI 43-101 Measured and Indicated gold equivalent ounces over and above those in the March 2013 PEA, at the time of the decision. Should Cangold elect not to place the project into production, Vista will have the option to buy back the original 70% for US$5,000,000 plus a similar escalator payment.

 

 

Latest News Release

Cangold Signs Formal Option Agreement for Guadalupe De Los Reyes Advanced-Stage Gold-Silver Project in Mexico

Cangold Ltd. has signed the formal option agreement whereby Cangold has been granted an option to acquire from Vista Gold Corp., up to a 100-per-cent interest (subject to certain underlying royalties) in the mining rights to the Guadalupe de los Reyes project in Sinaloa, Mexico.

 

The Guadalupe de los Reyes Project comprises 6,302 hectares, covering a past-producing district dating back to 1772. A Preliminary Economic Assessment ("PEA") carried out on the project by Tetra Tech for Vista on March 4, 2013 estimated an Indicated resource of 6.8 million tonnes at a grade of 1.73g/t gold and 28.71g/t silver (380,100 oz gold and 6,315,300 oz silver) as well as an Inferred resource of 3.2 million tonnes at a grade of 1.49g/t gold and 34.87g/t silver (155,200 oz gold and 3,639,000 oz silver) at a cut-off grade of 0.50 g Au per tonne.

 

"We look forward to commencing work on the Guadalupe de los Reyes Project," stated Robert Archer, President & CEO of Cangold. "There has already been a lot of excellent work done on the project including more than 42,000 metres of drilling in 420 holes. Our geologists can now conduct a thorough review of the data in order to bring themselves up to speed. Subsequent field work and geological modeling of the previous drilling will allow us to plan a new drill program and advance the project towards the pre-feasibility stage."

 

Cangold is considering the resource in the PEA to be a historical estimate as Cangold's qualified person has not done sufficient work to classify the estimate as a current mineral resource for Cangold, as per NI 43-101 requirements. Now that the formal option agreement for the Project has been signed, the Company will update the resource within the time frame required. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.

 

The 2013 PEA envisaged an open pit operation, while Cangold is considering a combined open pit and underground approach. Given the drop in metal prices since the PEA was released, a higher cutoff grade will also be applied. Initially, the Company plans to undertake a complete review of all previous work, update the resource, and conduct a detailed structural assessment of the property. Additional baseline studies and diamond drilling are contemplated in order to advance the project to the pre-feasibility stage.

 

Terms of the option call for Cangold to pay to Vista a total of US$5,000,000 in staged payments over three years (a total of US$1,000,000 in three payments in the first year, US$150,000 of which was paid upon closing) in order to acquire a 70% interest in the project. Cangold may then purchase the additional 30% by making a positive production decision and paying to Vista US$3,000,000 plus an escalator payment based upon the price of gold and the number of NI 43-101 Measured and Indicated gold equivalent ounces over and above those in the March 2013 PEA, at the time of the decision. Should Cangold elect not to place the project into production, Vista will have the option to buy back the original 70% for US$5,000,000 plus a similar escalator payment.

 

Robert Brown, P. Eng., Director and VP Exploration for Cangold is the Qualified Person for the Company. He has reviewed the technical information referenced above and has approved this news release.

 

 

Legal Notice / Disclaimer

 

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

 

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.

 

Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

 

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.


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