C2C Gold buys producing gold mine in Ecuador

C2C Gold (CCN-V) has bought a 50% interest in the Paraiso-Pambil mine on the Bella Rica property in Ecuador, which has produced about 25,000 oz. gold per year over the last 23 years.

The company hopes to increase annual production to 100,000 oz. gold over the next two years from the current 25,000 oz. per year. A technical report released last May recommended an initial US$4.78-million exploration program to define the resource potential of the mine.

Under the deal, C2C must spend US$2 million to raise the ore quantity and improve the quality of processing.

C2C must pay US$3 million plus 6 million shares to joint venture partner Ecuadorian David Andres Machuca Granda. After three years, C2C will pay Machuca 25% of the benefits it has received from mining operations.

Both parties have the option to acquire another 25% interest for US$30 million, which was increased from US$15 million in the initial offer.

The mine consists of more than 20 km of underground workings on three levels with six known veins within a 600-metre-long cross-cut, three of which have been developed. The company says another six veins have been discovered on surface, which have not yet been developed.

Mineralization was discovered after exceptionally heavy rains destroyed most of the crops on the coast of Ecuador during the winter of 1983, exposing many veins.

The property has 10 km of well-maintained secondary roads leading to the national highway, power, underground mine equipment, mill and mine buildings.

Bella Rica is about 30 sq. km in size and is located about 10 km from the Pacific Ocean and 60 km from the port city of Machala in southwest Ecuador.

C2C shares were down about 7% today, or 3, to 39 each on a trading volume of 111,000 shares.