Premier Gold Mines (TSX:PG) has taken the Cove Gold Project, located in the heart of the Battle Mountain-Eureka Trend in Nevada, off the hands of Victoria Gold Corp. (TSX-V:VIT) for US$28 million in cash and stock and another $20 million in future gold production.
Premier's stock was up 2.34% to $4.82 a share while Victoria Gold sank 6.67% to 28 cents a share.
Premier believes Cove Gold Project the property could become a "flagship" property due to excellent infrastructure and an inferred mineral resource of 231,300 ounces of gold at an average grade of 20.23 grams per tonne gold (g/t Au).
John McConnell, President & CEO of Victoria Gold, said funds from the sale of Cove will be used to advance the company's Yukon project.
"The funds from the Cove sale are slated to be used for construction activities at the Eagle Gold Project, which is expected to be Yukon’s next operating gold mine."
Premier enters into agreement to acquire the high-grade Cove Gold Project in Nevada
Shares Issued: 137,431,855
THUNDER BAY, ON, April 10, 2012 /CNW/ – PREMIER GOLD MINES LIMITED (TSX:PG) ("Premier") is pleased to announce that it has entered into a letter of intent to acquire a 100% interest in the Cove Gold Project, located in the heart of the Battle Mountain-Eureka Trend in Nevada, from Victoria Gold Corp. (TSX-V:VIT) ("Victoria").
The acquisition of Cove furthers Premier's strategy to build its United States based project portfolio in proven, accessible and low-risk jurisdictions that offer opportunities for the discovery of high-grade gold deposits. The Cove Project represents a major opportunity for Premier with the potential to become a "flagship" property for a number of reasons including:
The Helen Zone deposit is host to an inferred mineral resource of 231,300 ounces of gold at an average grade of 20.23 grams per tonne gold (g/t Au) or 0.59 ounces per ton (oz/t), and is currently being drill-tested for resource expansion".
The Cove deposit was mined (primarily by open pit) between 1987 and 2001, a period of comparatively low metal prices, producing approximately 2.6 million ounces of Gold, and 103 million ounces of silver.
The 6,972 hectare property (17,252 acres) has seen only limited surface exploration away from the Cove pit.
Excellent infrastructure (including paved roads & power) with secure land tenure in mining-friendly Nevada.
Advanced exploration permitting initiated by Victoria will continue under Premier's direction.
"The Cove Project is consistent with Premier's strategy to secure high-grade gold projects with significant upside potential and located in favourable mining jurisdictions" stated Ewan Downie, President and CEO of Premier Gold Mines Ltd. "Nevada ranks amongst the world's top mining districts and owing to the advanced state of permitting, Cove will rank amongst the most advanced projects within Premier's portfolio."
Total consideration for the acquisition is approximately US$28 million, payable over a three year term including $8 million on closing (with Premier having the option to satisfy up to 50% of such payments by issuing common shares to Victoria). Upon delivering a positive feasibility study containing a minimum of 500,000 ounces of gold or gold equivalent on the property, Newmont Mining Corporation ("Newmont") will have the right to enter into a joint venture with the owner of the project and acquire a 51% interest in the project by paying 250% of the aggregate expenditures made on the property since March 2006. In the event of production from the Property, additional payments are to be made to Victoria in the amount of Cdn$20.0 million, consisting of cash and/or the equivalent value of Consideration Shares, at Premier's option, payable in 4 instalments of Cdn$5.0 million each upon the cumulative production, to Premier's account, of 250,000, 500,000, 750,000 and 1,000,000 troy ounces of gold from the Project.
The transaction is subject to conditions normal for a transaction of its nature, including the approval of the Toronto Stock Exchange, and is scheduled to close within two business days after such approval.
Premier's management team believes that the Cove Project represents one of the most under-explored core projects in Nevada. The project is located in the heart of the Battle Mountain-Eureka Trend that is host to a number of multi-million ounce producing and past-producing mines. Previous exploration at Cove focused in the known resource areas and a number of prime exploration targets remain untested. The Helen Zone which carries a NI 43-101 compliant resource of 233,000oz Au as set out in technical report for Victoria titled "Preliminary Assessment on the Cove Project, Nevada, U.S.A." prepared for Victoria and dated May 5, 2011 is hosted in deeper rock units that were not previously recognized as a favourable host for gold, leaving the deeper units intact and virtually untested in the district . Like several other previous open pit mines in Nevada, the untested ground below the existing open pit serves as an attractive target to discover high grade gold deposits.
The Cove property could expand its high-grade resource by continued step-out drilling on the Helen Zone, a program that is currently underway. In addition, drilling below the Cove pit into the deeper mineralized rock formations remains a near-term priority. The intent is to demonstrate potential for a contiguous mineral resource to exist beneath the Cove pit to the Helen Zone 2,000 feet to the northwest. Premier will also immediately evaluate Cove's target-rich prospects by exploring favourable structural intersections along the Cove and other anticlines, follow-up on historic high-grade drill intercepts (>1.0 oz/t gold) at Windy Point, and test the Gold Dome Fault that was host to the historic Gold Dome Mine, whose production in the 1930's maintained grades between 0.25 oz/t and 2.00 oz/t gold (Source: "May 5, 2011 Report").
"Large portions of the property remain completely untested by drilling. The Cove project's favourable characteristics include grade, accessibility and significant upside potential rarely seen in advanced-stage projects" stated Brian Morris, Vice-President of Exploration for Premier. "It also positions Premier with another valuable project in the heart of a proven gold mining district, and represents a truly accretive opportunity for shareholders."
Premier holds several projects that are the subject of exploration programs in 2012. Recently, the haulage drift in Red Lake has crossed onto the Rahill-Bonanza Project (PG 49% and Red Lake Gold Mines 51%) that is located in close proximity to Goldcorp's Red Lake Gold Mines infrastructure. A new gold horizon is being defined on the East Bay Project (PG 35% and 50% – JV with RLGM) is located on the same structural trend along strike from Rubicon Mineral's F2 Zone deposit on its Phoenix Gold Project. Multiple drills are active on the 100%-owned Trans-Canada Projects, which include several deposits with multi-million ounces of NI 43-101 compliant mineral resources. A revised resource estimate is anticipated from three separate projects in the near future.
Premier is also negotiating its previously announced joint venture with Newmont USA Limited, , a subsidiary of Newmont, to consolidate the Saddle and Rain projects within the Rain Sub-district of Nevada's prolific Carlin Trend. The parties have agreed to a 45-day extension to the due diligence period to allow each party to evaluate all relevant information and assess additional required engineering and modelling for the joint venture. The due diligence period expires May 3, 2012.
The acquisition of the Cove project and the proposed the Saddle/Carlin joint venture project represent two of several opportunities Premier is evaluating in the United States having near-term development potential and long-term exploration upside. Premier views the United States as a geologically and politically attractive vehicle for its future growth.
The scientific and technical information contained in this press release was reviewed and approved by Stephen McGibbon, P. Geo., Executive Vice-President – Corporate and Project Development of the Corporation Mr. McGibbon is a Qualified Person for the purposes of National Instrument 43-101.
Premier Gold Mines Limited is one of North America's leading exploration companies with a high-quality pipeline of projects focused in proven, safe and accessible mining jurisdictions in Canada and the United States. The Company's portfolio includes significant assets in world class gold mining districts such as Red Lake, Musselwhite and Geraldton in Ontario and the Carlin Trend in Nevada.
This Press Release contains certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about strategic plans, future operations, future work programs, capital expenditures, discovery and production of minerals, price of gold and currency exchange rates, timing of geological reports, corporate and technical objectives, mineral resource estimates, and closing of the acquisition of Cove Project. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risk that regulatory approvals for the acquisition of Cove Project will not be obtained, risks inherent to the mining industry, adverse economic and market developments and the risks identified in Premier's annual information form under the heading "Risk Factors". There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. Premier disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
For further information:
Brian Morris, VP Exploration
Phone: (775) 304-9822
Web Site: www.premiergoldmines.com