TORONTO (miningweekly.com) – TSX-listed Kootenay Silver on Thursday announced that its Mexican subsidiary Minera JM (MJM) had entered into an option agreement with fellow TSX-listed miner AuRico Gold’s subsidiary Oro de Altar (ODA) that would allow ODA to earn up to a 100% interest in Kootenay’s San Diego property, in Mexico.
Under the terms of the agreement, ODA could earn a 65% interest by spending $3-million on exploration by April 8, 2018, and paying $480 000 to MJM by December 10, 2017, which would be used to fulfil MJM's commitments related to underlying property payments.
ODA would also be responsible for yearly Mexican assessment work and mining concession taxes during the term of the agreement.
After earning the initial 65% interest, ODA would have the right to acquire a 100% interest by paying $8/oz of gold or gold equivalent ounce of resource based on a National Instrument 43-101-compliant resource statement, which must be completed no later than 90 days after April 8, 2018.
After acquiring the full interest, MJM would receive a 2.5% net smelter royalty. If ODA decided not to exercise the second option to acquire the remaining 35%, a one-time cash payment of $250 000 would need to be paid to MJM and a joint venture would be formed to further develop the project.
The San Diego project, about 38 km north-west of AuRico’s El Chanate gold mine, sat within the Sonora-Mojave megashear, which hosted several operating gold deposits, including Chanate, Herradura, Mesquite and San Francisco.
Sampling conducted by Kootenay encountered gold values ranging from back ground up to 12.2 g/t gold in a mix of grab and chip samples. Silver values were also anomalous, along with copper and lead.