Joint-venture partners Southwestern Gold (VSE) and Cambior (TSE) have reached a purchase agreement with the owners of Peruvian resource company Minera Paraccay.
Minera Paraccay owns the Santa Rosa gold property, 60 miles southwest of Cuzco in south-central Peru. Southwestern and Cambior can buy all the company’s outstanding shares in return for US$11 million paid over a maximum of eight years.
An initial payment of US$2 million is due on closing, plus a further US$300,000 after one year and US$400,000 after two years, followed by US$500,000 in the third and fourth years. The remaining US$7.8 million is due in four annual instalments starting at the time of a commercial production decision.
Under a separate joint-venture agreement, Cambior holds a 70% participating interest and Southwestern a 30% participating interest in the project. Cambior has agreed to make all the cash payments to the shareholders of the Peruvian company and can recover US$9.5 million of the payments from project cash flow.
Santa Rosa hosts a large, high-grade system of gold and silver mineralization. It is exposed on surface over a strike length of 1,300 ft., a width of 500 ft. and a minimum vertical extent of 295 ft.
The mineralized section is tabular, shallow-dipping and open in all directions.
Southwestern completed extensive preliminary channel sampling over the exposed zone, returning excellent gold-silver values, including: 344 ft. grading 0.21 oz. gold and 2.48 oz. silver per ton; 295 ft. grading 0.37 oz. gold and 2.39 oz. silver; 200 ft. grading 0.36 oz. gold and 0.99 oz. silver; and 459 ft. grading 0.10 oz. gold and 0.40 oz. silver.
Cambior, now the operator, is upgrading infrastructure at the site to prepare for drilling early in 1994.
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