With its latest acquisition, Campbell Resources (TSE) has expanded farther into Latin America, beyond its Santa Gertrudis gold mine in Mexico. The company can now acquire the Cerro Quema gold project in Panama.
Situated 250 km southwest of Panama City, the 19,450-hectare Cerro Quema property is at an advanced stage. Heap-leachable reserves are estimated at 9 million tonnes averaging 1.27 grams gold per tonne, or about 370,000 contained ounces of gold.
Campbell acquired a right of first refusal to buy the shares of Minera Cerro Quema, a wholly owned Panamanian subsidiary of Cyprus Amax (NYSE) whose primary asset is the Cerro Quema property.
In return, Campbell will pay Compania d’Exploracion Mineral US$250,000 and 730,000 Campbell shares on the closing of the acquisition, and an additional US$250,000 and 730,000 common shares, conditional upon completion of a positive feasibility study. The right of first refusal will enable Campbell to buy the Cerro Quema property from Cyprus Amax Minerals (NYSE) for US$8.4 million.
In addition, Campbell can reduce the precious metals net smelter return royalty on the Cerro Quema property to 2% from 3.5%. To do so, it must issue to Exploracion Mineral 1 million Campbell common shares following the completion of a positive feasibility study.
Gold at Cerro Quema is found in two epithermal deposits hosted in Cretaceous-to-Tertiary-age, intermediate, volcanic rocks. The reserves were calculated following 56,000 ft. of reverse-circulation drilling and 14,750 ft. of diamond drilling performed since 1987.
Campbell expects the mine will be operational for six years, producing about 50,000 oz. gold annually. The low stripping ratio of 1.27-to-1 and projected gold recoveries of 86% will provide the company with another source of low-cost gold.
Capital costs needed to develop a mine are estimated at US$28 million. The mine could enter production as early as 1998.
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