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.
Cangold Ltd. is amending the pricing of the non-brokered private placement announced on Feb. 24, 2014. Due to softening market conditions, the financing will now consist of up to 7.5 million units at a price of 10 cents per unit, with each unit comprising one common share and one-half warrant, for gross proceeds of up to $750,000. Each full warrant will be exercisable for one common share of the company at a price of 18 cents for a period of one year from the date of issue provided, however, that should the closing price of the common shares on the TSX Venture Exchange be at least 25 cents per share for 10 consecutive trading days (at any time at or following the expiry of the four month resale restriction period), the company may, by notice to the holder (supplemented by a news release of general dissemination) reduce the remaining exercise period applicable to the warrants to not less than 30 days from the date of such notice.
As previously announced, the company has signed a formal option agreement whereby Cangold will be 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. Subject to the receipt of TSX Venture Exchange approval, the net proceeds of the placement will be used to make option payments, for initial work on the project and for general working capital.
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 1.73 grams per tonne gold and 28.71 g/t silver (380,100 ounces gold and 6,315,300 ounces silver), as well as an inferred resource of 3.2 million tonnes at a grade of 1.49 g/t gold and 34.87 g/t silver (155,200 ounces gold and 3,639,000 ounces silver) at a cut-off grade of 0.50 g/t gold.
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 National Instrument 43-101 requirements.
Robert Brown, PEng, director and vice-president of exploration for Cangold, is the qualified person for the company. He has reviewed the technical information referenced above and has approved this news release.