EcuaGold Signs Letter of Intent to Enter Into a Joint Venture in Colombia
25 September 2008 - 11:00PM
Marketwired Canada
EcuaGold Resources Ltd. ("the Company" or "EcuaGold") (TSX VENTURE:EGR) is
pleased to announce that its wholly owned Colombian subsidiary, ColombiaGold
Resources S.A. ("CGR") has signed a Letter of Intent (the "LOI") to enter into a
Joint Venture Operating Agreement (the "JV") with the Colombian owners (the
"Concessionaires") of the Santa Cruz (87 Ha) and Palmichala (96 Ha) gold
concessions (the "Concessions"), located near the historic mining towns of
Remedios and Segovia in the Department of Antioquia, Colombia.
CGR signed a 90-day Exclusivity Agreement with the Concessionaires in June 2008,
and based on work done to date, CGR has identified seven mesothermal quartz
veins on the Santa Cruz concession and six mesothermal quartz veins on the
Palmichala concession. CGR has also identified several other potential veins on
the Concessions, which need to be further investigated. The veins and associated
structures are distributed in a sub-parallel pattern, with 50 - 100 metre
spacings. The strike potential of several of the vein systems is believed to be
+/- 1.0 kilometre.
As is characteristic of the region, the veins are generally narrow, ranging from
approximately 0.20 to 2.00 metres in width with an overall average of
approximately 0.55 metres. The Concessions contain numerous historical, as well
as active, small-scale mines with historical gold mining activities dating back
to the early 1900's. These small-scale mining activities have generally been
limited to a depth of +/- 100 metres. By comparison, the Frontino Gold Mine, the
historic and largest gold mining operation in the region, has been mined both
along strike and to depths approaching two kilometres, with the reported widths
of the vein structures increasing at depth in some areas.
Selected assay results to date for certain key vein structures are, as follows:
SANTA CRUZ CONCESSION:
----------------------------------------------------
SAMPLE WIDTH AU AG
VEIN TYPE (metres) (g/t) (g/t)
----------------------------------------------------
MEZA CHANNEL 0.65 76.2 99.1
CHANNEL 1.05 33.6 48.2
CHANNEL 0.90 28.9 20.3
CHANNEL 0.60 40.9 45.1
CHANNEL 0.55 19.3 20.4
CHANNEL 0.55 32.9 21.1
CHANNEL 0.30 32.4 34.3
CHANNEL 0.45 18.3 22.7
CHANNEL 0.60 55.6 29.6
----------------------------------------------------
ISABEL CHANNEL 0.30 19.7 39.1
CHANNEL 0.30 22.0 12.8
CHANNEL 0.70 32.3 21.3
CHANNEL 0.30 62.3 47.2
CHANNEL 0.30 36.1 22.5
CHANNEL 0.20 51.9 71.5
----------------------------------------------------
EL CAFETAL CHANNEL 0.50 18.9 17.4
CHANNEL 0.30 15.3 16.5
CHANNEL 0.40 13.8 13.3
CHANNEL 1.10 13.8 548.0
----------------------------------------------------
PALMICHALA CONCESSION:
----------------------------------------------------
SAMPLE WIDTH AU AG
VEIN TYPE (metres) (g/t) (g/t)
----------------------------------------------------
EL CRIOLLA CHANNEL 1.60 5.1 3.5
----------------------------------------------------
BOMBA CHANNEL 1.50 4.0 1.7
CHANNEL 1.10 7.3 1.0
CHANNEL 0.74 3.6 1.3
----------------------------------------------------
ESPERANZA CHANNEL 0.20 19.0 11.2
CHANNEL 0.26 11.7 6.2
CHANNEL 0.20 97.3 82.2
----------------------------------------------------
A summary table of all sample assays can be found on the Company's website:
www.ecuagoldresources.com.
CGR has conducted various due diligence related geological programs to date,
including geological and structural mapping, underground surveying, rock chip
sampling of outcrops and float and channel sampling of surface and underground
veins at two metre intervals, where possible. These programs are ongoing. All
samples from the Concessions were sent to the Inspectorate sample preparation
facility in Medellin, Colombia for processing and were assayed at the
Inspectorate laboratory in Lima, Peru.
There has been only limited modern exploration work, including some drilling,
done on the Concessions, mainly in the mid 1990's. The Concessions are located
within the Segovia Batholith and on a mineralized trend which includes the
Frontino Gold Belt. The Frontino Gold Mine, located approximately 3.5 kilometres
north-northwest of the Concessions, has been in production for over 150 years,
with reported total gold production of approximately five million ounces.
Colombia historically has been the largest gold producer in South America,
dating back to the pre-Colombian period. It is reported that over half of
Colombia's historical production came from the Department of Antioquia, which
abounds with historical mines, both alluvial and underground hard rock.
Pursuant to the terms of the LOI, CGR paid the Concessionaires US$75,000 upon
signing the LOI and will be required to pay the Concessionaires an additional
US$75,000 upon signing the JV Agreement within 90 days from the signing of the
LOI, with an automatic 30 day extension, if required. The Parties have agreed to
form a JV legal entity that will own the Concessions and all project assets that
will be contributed to the JV by the Concessionaires to earn their initial 50
percent JV equity interest. CGR will be deemed to have earned its initial 50
percent JV equity interest by committing to fund all future exploration
activities and exploitation expenditures, both for small-scale and large-scale
mining operations. CGR will be the Operator of the JV reporting to a JV
Operating Committee, consisting of two representatives each of the
Concessionaires and CGR. Upon funding the preparation of a bankable feasibility
study (the "Study") and the development of a large-scale mining operation, as
recommended pursuant to the Study, CGR's JV equity interest will increase to 75
percent once commercial production is attained. The Parties will share in any
operating profits from either small-scale or large-scale mining operations in
proportion to their JV equity interests. Given the number of historical and
active small-scale mines on the Concessions, the Parties intend to investigate
the feasibility of initiating small-scale mining activities (up to 100 tonnes
per day) on the Concessions in conjunction with implementing a detailed
exploration program geared to proving up reserves for a future large-scale
mining operation. Any small-scale mine production would be processed either at
third party processing plants in the region or the JV may install a pilot plant
operation, if economically justifiable.
Mr. Anthony F. Ciali, President and CEO, stated, "We are very pleased to have
entered into our first agreement to acquire mineral property interests in
Colombia and, in particular, in one of the country's most historic and prolific
gold producing regions. With its Medellin-based geological team, CGR is actively
investigating other potential mineral properties and regions for future
acquisitions. EcuaGold is also aggressively pursuing mineral property interests
in Peru. We are encouraged by the number and quality of available Peruvian
prospects under investigation that meet with the Company's exploration growth
strategy."
Dr. William F. Lindqvist, a director of the Company, is the Qualified Person in
compliance with National Instrument 43-101 with respect to this release.
About EcuaGold Resources:
EcuaGold Resources Ltd. is engaged in the acquisition, exploration and potential
development of primarily precious metals properties in Colombia, Peru and
Ecuador. The focus of the Company's exploration activities is presently in
Colombia and Peru. EcuaGold controls, through wholly owned subsidiaries, a 100
percent interest in 13 granted concessions, comprising eight distinct projects,
in Ecuador, covering more than 34,000 hectares. The majority of EcuaGold's
concessions are located in southern Ecuador, a highly prospective region that is
currently host to a number of projects. These include Aurelian Resources' Condor
Project, IAMGOLD's Quimsacocha Project, International Minerals' Rio Blanco and
Gaby Projects and Dynasty Metals & Mining's Copper-Gold Belt, Zaruma and
Jerusalem Projects.
Please refer to EcuaGold's website at www.ecuagoldresources.com for further
information on the Company's projects and activities.
On Behalf of the Board of Directors of ECUAGOLD RESOURCES LTD.
Anthony F. Ciali, President, CEO and Director
The statements contained in this news release that are not purely historical are
forward-looking statements. Forward-looking statements may relate to the success
of any of the company's strategic initiatives, the company's expectations,
beliefs, growth and future prospects, and the company's position in the market
and future opportunities therein. Forward-looking statements may also include,
without limitation, any express or implied statement relating to future events,
industry performance, general business and economic conditions or circumstances,
regulatory and legal requirements, and other matters, many of which are beyond
the control of the company. Forward-looking statements involve risks and
uncertainties, which could cause actual results to differ materially from those
projected. All forward-looking statements included in this news release are
based upon information available to the company as of the date hereof and the
company does not undertake any obligations to update forward-looking statements
should circumstances or management's beliefs or opinions change.
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