Acquisition
21 February 2007 - 6:03PM
UK Regulatory
RNS Number:5997R
Patagonia Gold PLC
21 February 2007
PATAGONIA GOLD PLC
Trading Symbol PGD.L
ACQUISITION OF BARRICK'S PROPERTY PORTFOLIO IN SANTA CRUZ, ARGENTINA
BARRICK ELECTS TO TAKE PART CONSIDERATION IN NOTES CONVERTIBLE INTO 10% OF
PATAGONIA GOLD PLC
*The Board of Patagonia Gold Plc ("Patagonia Gold" or "the Company") is
pleased to announce that it has acquired Barrick's entire exploration
property portfolio in the Santa Cruz province of Southern Argentina
("Acquisition").
*The Barrick property portfolio contains 70 expidentes (mineral titles) in
six groups ("Properties") covering approximately 200,000 hectares in the
highly prospective Deseado massive region of the Santa Cruz Province in
Argentine Patagonia.
*To date, drilling carried out on the La Paloma Property, including the
very promising Lomada de Leiva discovery, has identified the potential for a
gold resource in excess of 500,000 ounces of gold (not compliant to Canadian
NI43-101).
*Infill Drilling has commenced on the Lomada de Leiva discovery.
*Initial consideration for the Acquisition comprises a cash payment of
US$800,000 and the issue by the Company of loan notes to Barrick,
convertible into shares representing 10% of the enlarged issued share
capital of Patagonia Gold.
Commenting on the Acquisition, Patagonia Gold's Chairman, Sir John Craven said:
"The acquisition of the extensive property portfolio held by Barrick in Santa
Cruz marks a significant advance for Patagonia Gold. We are delighted that
Barrick, a leading international gold producer, has elected to take part of the
consideration for the sale in the form of convertible notes and we look forward
to developing our relationship with Barrick in the future."
Description of the Properties
The Properties are a highly prospective portfolio containing 70 expidentes
(mineral titles) in six groups covering approximately 200,000 hectares in the
Deseado massive region of Santa Cruz Province in Argentine Patagonia.
The volcanic plateau of the Deseado massif is 60,000 km2 in area and hosts
several mines and advanced projects such as Cerro Vanguardia, Mina Martha,
Manantial Espejo, Huevos Verdes, Cerro Negro as well as numerous smaller
prospects and showings. These projects are low sulphidation epithermal "bonanza"
vein style gold-silver deposits, the main target for exploration in this region.
Santa Cruz province has an active and established mining industry and contains a
very active petroleum industry and accordingly all the infrastructure associated
with exploration and mining. The closest town to the main project area, Perito
Moreno is serviced by bituminised all weather roads.
Lomada de Leiva on the La Paloma Property is the most advanced area drilled by
the Vendors, where a preliminary in house resource by the Vendors has been
calculated. They identified in total the potential for more than 500,000oz gold
(not compliant to Canadian N143-101) in three drilled prospects throughout the
Property.
Lomada de Leiva. Drill hole intersections include;
Hole ID From Interval Au g/t
DDH-LP05 49.00 3.44 3.16
DDH-LP05 86.75 3.29 5.34
DDH-LP07 36.00 11.00 5.33
Including 38.60 1.40 15.80
DDH-LP07 49.00 17.00 5.45
DDH-LP11 6.80 3.20 5.30
DDH-LP11 12.00 17.60 9.08
Including 15.00 1.00 24.70
DDH-LP12 78.65 10.00 3.13
DDH-LP14A 105.00 4.00 2.85
DDH-LP20 60.50 4.75 3.90
DDH-LP25 21.00 7.15 2.71
DDH-LP35 88.35 7.35 4.97
Including 89.75 1.40 16.70
DDH-LP36 36.95 12.45 2.59
DDH-LP37 63.80 14.70 5.21
Including 74.00 1.00 13.30
DDH-LP44 44.00 11.00 3.00
Gold mineralization at Lomada de Leiva occurs in a NNE-striking, steeply
ESE-dipping tabular zone (500 metres strike x 200 metres normal to strike) with
reported gold drill intersections up to 200 metres (vertical) from surface.
Geology is characterised by gold mineralized breccias mostly containing angular
clasts of rhyolite and occasional clasts of crustiform-colloform banded quartz.
The breccias have cut and, perhaps, destroyed earlier quartz veins and are
themselves cut by at least two phases of narrow chalcedonic quartz veins and
late hematite-jarosite veining.
A programme of infill drilling at Lomada de Leiva will be carried out to test
the main mineralized zone (500 metres strike length by 200 metres down dip) at
maximum of 50 metres grid line spacing.
The above drill programme, has commenced and the drilling contract has been
awarded to an Argentine based company. In addition an access agreement with the
estancia owner has been agreed and the Environmental Impact Study (EIS),
undertaken by the Vendors, will be transferred to Patagonia Gold.
The portfolio of Properties includes a number of other exciting prospects,
several with preliminary in-house resources, including the Brecha Sofia zone
where the following drill intersections were identified:
Brechia Sofia zone. Drill hole intersections include;
+---------+------+--------+------+
| Hole ID | From |Interval|Au g/t|
+---------+------+--------+------+
|DDH-LP42 |272.50| 3.00|140.61|
+---------+------+--------+------+
|DDH-LP47 |100.00| 12.00| 2.41|
+---------+------+--------+------+
|DDH-LP51 |251.70| 10.00| 4.99|
+---------+------+--------+------+
|DDH-LP54 | 0.35| 17.85| 3.50|
+---------+------+--------+------+
The Brecha Sofia occurance is characterised by narrow gold-bearing, drusy quartz
veinlets and breccia matrix that report up to bonanza gold grades (400 g/t Au).
Mineralization here is typical of a low sulphidation epithermal veinlet and
stockwork deposit.
Brecha Sofia, together with the two other previously drilled prospects,
Manchuria and Bagual require further exploration, including geological
structural and alteration mapping, as well as systematic geochemical sampling
prior to further drilling. In addition there are numerous significant geological
and geochemical zones that require exploratory drilling.
It is intended that the above work will be conducted in parallel to the proposed
infill drilling at Lomada de Leiva.
The Patagonia Gold property 'Cerro Vasco' immediately to the north of La Paloma
has recently retuned rock chip samples of 2.85m @ 44.2g/t Au in a breccia
considered similar to that at La Paloma. An EIS to enable drilling on the
property has been lodged.
The Terms of the Acquisition
The Company and its wholly owned Argentinean subsidiary, Patagonia Gold S.A.
("PGSA") have acquired the rights, title and interest in 70 mining and
exploration claims and properties currently held by Barrick Exploraciones
Argentina S.A. and Minera Rodeo S.A. (together "the Vendors") being subsidiaries
of Barrick Gold Corporation.
The initial consideration for the Properties payable to the Vendors has an
aggregate value of approximately #2,572,350 and comprises (i) a cash payment by
PGSA of US$800,000 and (ii) the issue by the Company of #2,162,092.65 of loan
notes ("Loan Notes") which are convertible into ordinary shares of 1p each in
the capital of the Company ("Ordinary Shares") at a conversion rate of 7.125p
per Ordinary Share. Accordingly, upon conversion, the Loan Notes, will convert
into 30,345,160 Ordinary Shares, representing 10 per cent. of the Company's
current issued share capital (as would be enlarged by the issue of such shares).
To the extent not previously converted or redeemed, the Loan Notes will fall to
be repaid by the Company on 20 February 2009. The Loan Notes will become
redeemable by the holders thereof after 20 February 2008 and to the extent that
any Loan Notes remain outstanding at such time, interest shall be payable on the
outstanding Loan Notes from the commencement date at the rate of 5.25 per cent.
per annum. The Loan Notes may be converted by the Vendors at any time on or
after 27 February 2007 and by the Company at any time after 31 May 2007.
A further cash payment of US$1.5 million will become payable to the Vendors upon
the delineation of 200,000 oz or greater of gold or gold equivalent ( 43-101
Indicated Resource) on the La Paloma Property group. In addition PGSA has
granted to the Vendors an option to buy back up to a 70 per cent. interest in
any particular Property group upon the delineation of greater than 2 million oz
of gold or gold equivalent (43-101 Indicated Resource) on that Property group.
Under the terms of the acquisition agreement, PGSA has committed to complete a
minimum level of expenditure of US$10 million on the Properties over a 5 year
period. This will include a commitment of US$1.5 million in the first 18 months.
Marc Sale, (BSC. Geology, member AusIMM, member AIG) a Director and consultant
to Patagonia Gold Plc and a qualified person as defined in National Instrument
43-101, has reviewed and verified all scientific or technical mining disclosure
contained in this press release.
For more information, please contact:
Bill Humphries / Richard Prickett Anthony Cardew/Tim Robertson
Patagonia Gold Plc Tel: +44 (0) 20 7930 0777
Tel: + 44 (0)20 7409 7444 Fax: +44 (0) 20 7925 0647
Email:tim.robertson@cardewgroup.com
www.patagoniagold.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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