Gitennes to sell flagship property in Peru to Cambior

Cambior (CBJ-T) will become the new owner of Gitennes Exploration‘s (GIT-T) flagship property in Peru under the terms of a proposed option agreement between the two companies.

In exchange for cash payments totalling US$7 million and royalties on mine production, Gitennes will sell to Cambior a 100% interest in Compania Minera Kori Pampa, owner of the Virgen gold property and other nearby concessions.

The Virgen property lies next to Cambior’s La Arena property. Two adjacent concessions contain drill-defined, near-surface, disseminated gold deposits with a combined preliminary resource estimated at more than 1 million oz.

The cash payments will be made in three instalments: US$2.5 million upon closing; US$2.5 million 12 months after closing; and a final US$2 million 24 months after closing. The payments are based on an assumed gold resource of 400,000 oz. gold valued at US$17.50 per in situ ounce.

If Cambior elects not to make the second or third payment, the option agreement will be terminated and the concessions will revert to Gitennes.

The royalties will kick in once the Virgen property produces 400,000 oz. gold. They are based on a 3.25% net smelter return (NSR) royalty for gold production, a 2% NSR for silver production, and a 1% NSR for base metals and/or other minerals produced from the property. The gold NSR will drop to 2% once royalty payments have reached US$13 million.

Cambior will loan Gitennes $250,000 until the deal closes or is terminated.

Gitennes says Cambior plans to fast-track prefeasibility exploration and development at Virgen, while the junior will use the proceeds of the sale to acquire and explore new properties.

The sale is subject to Cambior’s due diligence review of Kori Pampa’s legal and fiscal structure, execution of a definitive agreement, and approval by Gitennes’ shareholders.