Vancouver-based junior Energold Mining (VSE) has entered into an agreement that sets the stage for it to acquire El Higo, a concession in the Dominican Republic.
The concession hosts the Centenario gold deposit, which is described as a “potentially economic,” open-pitable resource containing an estimated 6.8 million grams (220,000 oz.) gold within 1.09 million tonnes grading 6.27 grams per tonne. This resource is based on about 2,000 metres of drilling in 35 holes and extensive surface sampling.
The concession is currently held by Minera Hispaniola, a subsidiary of Battle Mountain Gold (NYSE), and its partner, Canyon Resources (NASDAQ). Minera holds several other concessions in the Caribbean country, as well as an extensive data base.
Two Vancouver companies, Eldorado (TSE) and HRC Development (VSE), which are related by way of common management, have an option to acquire all the shares of Minera Hispaniola. Energold, in turn, has reached an agreement with Eldorado/HRC whereby it will assume their right to this option. The agreement is not yet formal, and is subject to satisfactory financing, regulatory approvals, the consent of Battle Mountain and Canyon, and due diligence. The consideration for the acquisition, based on Eldorado/HRC’s letter of intent with Battle Mountain and Canyon, includes US$1.05 million in payments to the vendors, US$3 million of expenditures over three years, a 3% net smelter return to the vendors from production at El Higo (capped at US$2 million), and a separate net smelter return not to exceed 3% on certain other properties.
Energold will repay about US$60,000 in costs incurred to date by Eldorado/HRC’s Dominican subsidiary, as well as a finder’s fee paid in shares of Energold.
The Eldorado/HRC subsidiary will carry out a US$100,000 private placement in Energold at 58 cents per share, with rights to acquire a further equivalent number of shares for an additional year at the same price.
The Eldorado/HRC subsidiary will have the right to participate, up to 20%, in any additional underwriting specific to the Higo project.
Energold plans to conduct infill drilling as part of its prefeasibility study of the Centenario deposit.
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