Metallica buys Colombian companies

CDN-listed Metallica Resources has bought into two Colombian mining companies.

The Canadian junior will pay US$200,000 and issue 150,000 common shares to purchase all outstanding shares of Guavita and 80% of the shares of Minabarnete.

Both companies control mineral rights and applications in the regional department of Bolivar in northern Columbia. Guavita holds 3,212 acres of exploration licences pursuant to a purchase option agreement, as well as applications made with a government department for an additional 29,652 acres. Minabarnete controls exploration licences covering 371 acres. The licences and applications cover four small-scale producing mines in Bolivar. Since 1986, this emerging gold-producing region has turned out about 300,000 oz. annually.

Mineralization is hosted in lode gold deposits associated with wide zones of hydrothermal alteration. The properties host numerous small workings in Jurassic-aged volcanics.

Metallica will carry out a first-phase, US$200,000 program of line-cutting, stream and soil geochemical sampling, geophysical surveys and geological mapping. Efforts will focus on proving up large-tonnage, potentially open-pit, epithermal gold deposits. If results from the first phase warrant it, a drill program could start as early as this summer.

As consideration for the purchases, Metallica paid US$100,000 and issued 50,000 shares on the deal’s closing. The balance of the cash will be paid once the applications are approved, whereas the shares, now in escrow, will be released at 6-month and 12-month intervals following receipt of the second cash payment.

Shareholders of Guavita and Minabarnete both have “back-in” option agreements representing 20% and 16% interests, respectively.