The Vancouver Sun reports in its Friday edition Timmins Gold will exchange $10-million cash and shares worth $15-million to acquire the Caballo Blanco open pit gold mine project in Mexico from Goldgroup Mining (all figures U.S.). A Canadian Press dispatch to The Sun says there is also a contingency for Timmins to pay another $5-million once a permit is granted, making the deal potentially worth $30-million. The transaction could nearly double Timmins Gold's annual production to more than 220,000 ounces. The Vancouver-based company's main holding is the San Francisco gold property in Sonora, Mexico, with a projected production of between 115,000 and 125,000 ounces of gold this year, at a cash cost of $800 per ounce. Keith Piggott, chief executive officer of Goldgroup, said the company will use proceeds from the sale to advance the San Jose de Gracia project in Sinaloa and possibly for acquisitions. The company's holdings include a 50-per-cent interest in DynaResource de Mexico, SA, which owns the San Jose de Gracia project. "This sale unlocks the value of Caballo Blanco for Goldgroup shareholders and dramatically improves our balance sheet," Mr. Piggott said in a statement Thursday.