Greenstone to buy stake in Honduran mine

A planned merger between Greenstone Resources (TSE) and Fischer-Watt Gold (NASDAQ) will not proceed.

The latter was unable to secure the required lock-up and escrow agreements from its majority shareholders. Consequently, Greenstone will acquire an option to buy all of Fischer-Watt’s rights and interests in the San Andres gold project in western Honduras.

Greenstone will pay the Nevada-based company US$100,000 and forgive a US$94,300 loan provided to it, pursuant to the terminated merger. Greenstone must exercise the option on or before Oct. 31 by paying Fischer-Watt a further US$55,700 and issuing US$700,000 worth of Greenstone common stock, valued at the time of exercise.

After these transactions, Greenstone would then be assigned Fischer-Watt’s option to acquire 51% of Compania Minerales de Copan, S.A. de C.V. Fischer-Watt has option agreements to acquire a 25.5% interest from Milner Consolidated Silver Mines (ASE) and 25.5% from North American Palladium Resources (TSE).

Compania Minerales controls the San Andres project and is currently producing gold from a small, open-pit, heap-leach operation. Greenstone will also acquire all of Fischer-Watt’s other rights and interests in the San Andres project.

Greenstone will assume all of Fischer-Watt’s obligations on the project during the option period, including a 2,500-metre reverse circulation program scheduled to begin immediately. Drilling is designed to delineate known mineralization east of the pit as well as test new targets on the property. San Andres has a geological resource of 5.6 million tonnes at 3.2 grams gold per tonne.