Sargold still bullish on Sardinia

Sargold Resource (SRG-V) is increasing its stake on the Italian island of Sardinia by acquiring Gold Fields‘ (GFI-N, GOF-L) 15% interest in a gold exploration project there.

Vancouver-based Sargold is taking Gold Fields Venezuela‘s — an indirect subsidiary of Gold Fields — interest in the Monte Ollasteddu project in the south eastern part of the Mediterranean island by issuing shares worth $500,000.

The shares will be issued in a series of three tranches. The first is to be issued on the closing date of the deal 833,333 shares at 20 a share. The next one third will be issued one year later, and the final one third will be issued the following year. Those two subsequent issuances will be done on a share price based on the average price of the preceding 30 trading days.

In Toronto on Oct. 30, Sargold’s shares were up nearly 13% or 2 to 22 on 125,000 shares.

The deal still allows Gold Fields to acquire a 60% interest in the property if Sargold can define a resource of 3.5 million oz. of gold. Sargold is currently running the exploration project.

In addition, Gold Fields has agreed to subscribe for a private placement for 5 million common shares of Sargold at a price of 25 per share, for proceeds of $1.25 million to be used for exploration work and working capital.

The deal supersedes the existing joint venture agreement between the companies, which Sargold assumed as part of its roughly $2.8 million deal for a 75% interest in SGM Ricerche which it acquired from Toronto-based Medora Resources (MRS-V, MRL-L) in the summer of this year.

The Monte Ollasteddu property is in the Eastern Paleozoic belt an area of the island the company describes as an “important emerging gold district”.

The move comes as Sargold looks to further solidify its position in Sardinia. The company was the first Canadian-based junior to get involved in Sardinia striking a deal in March of 2003 to acquire a portion of the Furtei mine. It currently controls the largest precious metals exploration and mining area in Sardinia.

Furtei is Sargold’s most advanced project, with a number of potential open pit and underground mines, a 1,000 tonne-per-day treatment facility, and a fully permitted mining concession including future tailings disposal.

Furtei has a historical resource estimate 200,000 oz. gold, and Sargold is now working to create a feasible restart plan for an operating plant in the central part of the island.