Newmont to extend footprint in Colombia with Lyra gold project deal

Continental’s Buriticá gold project encompasses an aggregate area of 75,023 hectares in the Antioquia Department in north-western Colombia.(Image courtesy of Continental Gold)

Shares in Canadian junior Miranda Gold (TSX-V:MAD) surged 17% on Wednesday after world number two gold producer Newmont Mining (NYSE:NEM) signed an option agreement to earn an interest in the company’s Lyra gold project in Colombia.

As part of the deal, Vancouver-based Miranda, will operate a $600,000 prospecting program funded by Newmont over 18 months or less, unless the applications are converted to concession contracts before that period.

The US miner will eventually have to invest a minimum of $3 million in Miranda Gold’s Lyra project to be granted a 51% stake on it.

If that happens, Newmont will decide on whether it wants to get a 51% stake in the project, located in in the Department of Antioquia, 120km northwest of Medellín.

Newmont, the only gold company that forms part of the S&P500 index, will have to invest a minimum of $3 million in the project over the course of the subsequent four years to be granted a majority stake.

Miranda’s shares shot up on the news, trading 17% higher to 35 Canadian cents by 10:25 am ET.

Last year, the US miner bought about 20% of another Canadian company, Continental Gold Inc (TSX:CNL), to secure access to the Buriticá project, located in Antioquia in northwest Colombia.

The Lyra project comprises in 14 concession contract applications totaling 54,895 hectares covering more than 25km of the Tonusco Fault that extends south from the Buriticá vein system.

Data from Colombia’s Institute of Geology and Mining (Ingeominas) shows 50 of 61 of their samples on Lyra are non-detectable to 0.3 g Au/t, 11 samples are greater than 0.3 g Au/t, and 6 of those 11 samples greater than 1 g Au/t.

Miranda infers that the Tonusco Fault is a feeder to the Buriticá vein system and that Lyra may offer an extension to the Buriticá district and additional similar vein systems may occur along the Tonusco Fault on Lyra.