GoGold Resources (TSX: GGD) announced Monday the company has signed a letter of intent with Animas Resources (TSX.V: ANI) to acquire a 100% interest in the past producing Santa Gertrudis Gold Mine.
Located in northern Mexico, the Santa Gertrudis Mine was operated as an open pit, heap leach operation between 1991 and 2000 that produced 564,000 ounces at an average grade of 2.13 g/t gold.
Terms of the agreement call for GoGold to make $3 million in cash payments to Animas over three years and pay a Net Smelter Royalty (NSR) ranging between 2-3% based on the metals mined. GoGold retains the right to purchase one-third of the royalty at any time for an additional $5 million cash payment.
“We are pleased to have the opportunity to put the Santa Gertrudis Gold Mine back into production,” said GoGold President and CEO Terry Coughlan. “The Santa Gertrudis mine fits GoGold’s vision to add projects with potentially low start-up costs and a fast track to production. With our teams’ past track record of successfully building and operating mines in Mexico, we believe that we can bring this past producing mine back into operation quickly adding significant value for our shareholders.”
The Gertrudis deposit was discovered by Phelps Dodge in the 1980’s and commenced production in 1991. Phelps sold the mine to Campbell Resources in 1994. The mine was shut down in 2001 due to depressed commodity prices. Animas acquired the project from Sonora Gold in 2007.
A National Instrument (NI) 43-101 report was prepared in 2010. The report outlined an Inferred resource estimate of 13.5 million tonnes grading 1.28 g/t for a total of 557,000 contained gold ounces.
GoGold is reviewing over 250,000 meters of historic drilling in an effort to upgrade Inferred resources to the Measured and Indicated categories. The company is targeting completion of a Bankable Feasibility Study (BFS) during the second quarter of 2014.
Added Animas Director Mark Brown: “We are pleased to have an experienced group like GoGold working with Animas to put the Santa Gertrudis Gold Mine back into production. The GoGold group has built three companies, including Gammon Gold Inc., and successfully built and operated mines in Mexico. GoGold has the financial resources in place to complete this project.”
Shares of GoGold are traded on the TSX under the ticker symbol GGD. The company has 128 million shares outstanding and holds a market cap of $127 million after gaining 4.2% during Monday’s market session.
