Agnico-Eagle buys 18.6% of Mexico-focused Colibri

Major Canadian gold miner Agnico-Eagle Mines (AEM-T, AEM-N) has acquired six million shares and four million share purchase warrants of Nanaimo-based Colibri Resources (CBI-V), exploring for gold and polymetallic mineralization in northwestern Mexico’s Sonora State. It bought the shares in two private placements at 20¢ each for a total of $1.2 million.

The purchase comes as part of a newly signed option agreement whereby Agnico-Eagle can earn up to a 75% interest in the junior explorer’s eponymous Colibri gold project, which hosts several dozen historical artisanal mine workings. To earn its interest, Agnico-Eagle must spend US$3 million on exploration over the next three years, complete a positive feasibility study within five years and make option payments totalling US$1.45 million over seven years.

The project is located in the northern Sonora gold belt, home to 14 significant known gold deposits occurring along the northwest-trending Mojave-Sonora megashear, a major Late Jurassic continental-scale transform fault analogous to the modern-day San Andreas Fault. Fifty kilometres along strike of Colibri is one of Mexico’s largest gold mines, La Herradura, operated jointly by Newmont Mining (NEM-N, NMC-T) and Mexican miner Fresnillo (FRES-L). Even closer is the El Chanate mine formerly operated by Capital Gold before its recent purchase by Gammon Gold (GAM-T, GRS-N), as well as Timmins Gold‘s (TMM-T) San Francisco mine, both just a few dozen kilometres from Colibri’s borders. Last but not least, the Noche Buena gold mine being developed by Fresnillo is also 20 km to the northwest.

Agnico-Eagle currently has one producing gold mine in Mexico, Pinos Altos, in neighbouring Chihuahua State. Commercial production at the open-pit mine began in late 2009, with 131,097 gold oz. poured in 2010 at an average cash cost of US$425 per oz.

Colibri Resources has been exploring its main gold project as well as two other nearby polymetallic projects since acquiring them and listing in 2005. Exploration largely shut down during 2009 and 2010, however, after the financial crisis forced the company to conserve cash and stop drilling. So far this year it has made good progress toward restarting serious exploration work, signing the initial letter of intent with Agnico in December 2010, starting a 2,000-metre drill program at its Ramard copper-zinc-silver project in March, and closing the deal with Agnico in late May.

At Ramard’s La Bronca zone, recently released assays for the first 10 of 28 holes completed this year returned three metres of 741.7 grams silver per tonne, 5.79% lead and 10.52% zinc about 18 metres below surface. The company’s third  project is a nearby silver-molybdenum prospect called Leon. Colibri says all three encompass former producing mine camps in excess of 3,000 hectares each, noting none of the camps have been explored by other companies using modern geological or geophysical methods.

Colibri’s president and CEO is Nanaimo-based Lance Geselbracht, a registered civil engineer in the state of Washington whose work experience mainly lies in heavy civil construction and environmental remediation. He currently serves as president of one other company, Nanoose Bay Estates, a private land-development company on Vancouver Island. Also in the home business is Colibri’s chief financial officer, William Walker, a self-employed mortgage consultant in Nanaimo.

Heading up the exploration side of things is Jonathan Nourse, Colibri’s vice-president of exploration and a full-time geology professor at California State Polytechnic University. Joining him as manager of exploration with a PhD in geology is James Irwin, a founding director of the company.

More relevant to Colibri’s latest deal, however, is director Roger Doucet, who joined the company in 2007. He has been Agnico-Eagle’s exploration manager in Mexico since 2006, with responsibilities that include overseeing exploration work at the company’s Pinos Altos mine.

According to insider trading reports filed on SEDI, none of the directors or officers listed above own much stock. CFO Walker owns the most with a measly 165,000 shares bought over five years ago, while president Geselbracht owns 132,500 shares as well as options to buy 525,000 more between 10¢ and 26¢.

Nevertheless, shares of the Colibri have risen steadily from 15¢ in January 2011 and 4¢ in July 2010. On June 3, they closed up 3¢ to 31¢ on 72,300 shares traded.