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Vista Gold Corp (2)
Symbol VGZ
Shares Issued 82,275,217
Close 2014-04-14 C$ 0.59
Market Cap C$ 48,542,378
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Cangold options Guadalupe de los Reyes from Vista Gold

2014-04-15 08:39 ET - News Release

See News Release (C-CLD) Cangold Ltd (2)

Mr. Robert Archer of Cangold reports

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 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 grams per tonne 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 grams per tonne gold and 34.87 grams per tonne silver (155,200 ounces gold and 3,639,000 ounces silver) at a cut-off grade of 0.50 gram per tonne gold.

"We look forward to commencing work on the Guadalupe de los Reyes project," stated Robert Archer, president and chief executive officer 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 fieldwork and geological modelling of the previous drilling will allow us to plan a new drill program and advance the project towards the prefeasibility 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 National Instrument 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 cut-off 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 prefeasibility stage.

Terms of the option call for Cangold to pay to Vista a total of $5-million (U.S.) in staged payments over three years (a total of $1-million (U.S.) in three payments in the first year, $150,000 (U.S.) of which was paid upon closing) in order to acquire a 70-per-cent interest in the project. Cangold may then purchase the additional 30 per cent by making a positive production decision and paying to Vista $3-million (U.S.) plus an escalator payment based upon the price of gold and the number of National Instrument 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 per cent for $5-million (U.S.) plus a similar escalator payment.

Robert Brown, PEng, director and vice-president, exploration, for Cangold is the qualified person for the company. He has reviewed the technical information referenced above and has approved this news release.

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