Vancouver – Launching only last autumn as a Nova Scotia-focused gold play, NSGold (NSX-V) has now entered into a definitive option agreement for 100% of the Dios Padre silver property in Mexico’s Sonora State.
The company first announced a letter of intent on the deal in mid-March before completing due diligence and announcing the definitive deal a month later.
Investors seem to prefer Mexican silver to Nova Scotia gold, as NSGold’s share price climbed from 41¢ before first announcing its Mexican intentions to a high of 58¢ within a week. On news that the option deal was confirmed, the company’s share price climbed 14¢ or 28% to 64¢ to reach an all-time closing high.
The 2.85-sq.-km Dios Padre property hosts a historic silver mine on which several historic resources have been completed. The resources range from 700,000 tonnes to 6 million tonnes at grades between 235 grams silver per tonne to 420 grams silver, though none are national instrument 43-101 compliant.
The mine is certainly old, with Jesuits apparently operating it starting in the 17th century. Further minng took place between 1860 and 1910 along with some sporadic mining since. A pilot plant was constructed in the mid 1960s and apparently achieved respectable recoveries, though NSGold reports that it would require “extensive rebuilding”.
The Dios Padre deposit is characterized as a breccia pipe that is open at depth. Along with the plunge potential of the breccia body, NSGold notes that numerous altered and mineralized areas may be seen on the property. There is also the potential for base metals, including historic reports of long copper intercepts.
NSGold can earn its 100% interest from Cia Minera Pena Blanca by paying US$6 million in cash and issuing 1.25 million shares over five years. The vendor keeps a 3% net smelter return royalty, of which NSGold can buy 2% for US$2 million before commercial production. The company currently has 30.7 million shares outstanding.
In a statement, NSGold chairman and CEO Hans van Hoof said “I believe that the Dios Padre acquisition is a great development for the company, one which will more than complement our solid Mooseland project….As the largest shareholder, with over 30 per cent ownership, I’m extremely pleased with the way this deal has been structured.”
The company continues to work on its Nova Scotia Mooseland project, with several assays pending and a resource estimate in the works.
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