Patagonia Gold Plc, the mining company with gold and silver projects in the southern Patagonia region of Argentina, Chile and Uruguay, announced that on 22 December 2017 the Company signed the Definitive Agreement to acquire the Calcatreu Deposit from Pan American Silver Corp. («Pan American»), by way of acquiring all shares of a wholly-owned subsidiary of Pan American, for a total consideration of US$15 million.
Patagonia Gold was granted an exclusive option to purchase the Calcatreu deposit as initially announced on 24 April 2017.
Pursuant to the Definitive Agreement, Patagonia Gold will make an initial payment of US$5 million upon closing of the acquisition, which is expected to take place on or before 31 January 2018 subject to certain customary closing conditions. The US$5 million will be paid from the recently completed fundraising announced on 8 December 2017. The remaining US$10 million is due on 18 May 2018 and will be settled using a combination of funds from the recent fundraising and the Company’s existing cash resources.
Patagonia Gold intends to advance the Calcatreu project during 2018 by exploring the area immediately around the existing resource with the aim of increasing the resource. The Company is confident that there remains significant potential to increase the existing resource base and believes that approximately 12-18 months will be required to generate and drill off known targets. The system has a known strike length of over 8 km and the Company believes that this may well increase with an improved knowledge of the system and more detailed geophysical and geochemical surveys which the Company intends to undertake on completion of the acquisition. The Company has the financial resources necessary to progress the project following the recent fundraising.
About the Calcatreu Deposit
The Calcatreu Deposit is a high grade (2.325 g/t AuEq) low sulphidation gold system with the mineralisation outcropping at surface. An independent mineral resource estimate was completed by Micon International Limited of Toronto in 2008 for the Calcatreu Deposit, prepared in accordance with the Canadian National Instrument 43-101 requirements and set out the current resource, which contains 8 million tonnes at 3.04 g/t AuEq for 780,000 oz in the Indicated category and a further 255,000 oz at 2.32 g/t AuEq in the Inferred category. This resource model was completed in 2008 using a gold price of US$650/oz and a silver price of US$12.50/oz. The surrounding land package is large with over 25,000 hectares of sparsely explored terrain.