Timmins Gold Corp. has reached an agreement to acquire 100% of the past producing San Francisco gold mine in Sonora, Mexico as well as the gold plant and equipment and infrastructure. The agreement provides for the purchase of the shares of the company that holds the mineral concessions and all permits and other rights associated with the property. Timmins Gold previously had an agreement to acquire a 50% interest. The San Francisco mine is a past producing, open pit heap leach operation. Operations were terminated in 2001 due to the low price of gold. For additional information on the San Francisco mine please refer to the Timmins Gold website at www.timminsgold.com. Timmins Gold has also agreed to purchase the gold plant and equipment, as well as the other infrastructure on site.
The purchase price for the mineral concessions and other rights will be USD$5,000,000 split into two equal payments with the first payment due on execution of the formal agreement and the balance due by October 31, 2007, and the issuance of ten million common shares of Timmins Gold. The purchase price for the gold plant and equipment as well as the other infrastructure will be a further USD$3,500,000 which may be paid at any time over the next three years without interest.
The shares will be subject to a voting trust agreement and a pooling agreement which allows for the release from pool in equal increments over a three year period. The vendor will have the right to appoint a nominee to the board of directors or advisory committee of Timmins Gold during the term of the pooling agreement. To date, Timmins Gold has expended approximately USD$1,700,000 on exploration and development of the San Francisco project, mainly on drilling. The purchase is subject to regulatory acceptance.
On January 18, 2007, Timmins Gold announced the independent mineral resource estimate on the San Francisco property. The estimate, completed by Independent Mining Consultants, Inc. of Tucson, Arizona (IMC), was prepared using the CIM definitions (August, 2004) for mineral resources as required by National Instrument 43-101. The mineral resource, based on a US$500 per ounce gold floating cone with 64% recoveries, US$1.00 per tonne mining cost (reflecting projected owner mining costs) and 0.23 g/t gold cutoff grade is:
|Gold (thousand troy oz)|
|Measured Mineral Resource||5.35||0.91||156.9|
|Indicated Mineral Resource||22.30||0.78||559.9|
|Total Measured + Indicated||27.65||0.81||716.8|
|Inferred Mineral Resource||2.51||0.79||63.5|
Micon International Limited, along with IMC has completed a technical report using the guidelines contained in NI 43-101, supporting the mineral resource estimate. The report has been filed on Sedar. Micon is also in charge of new metallurgical studies designed to increase recoveries.
Sol & Adobe, Ingenieros Asociados S.A. de C.V ("Sol") have been commissioned to complete a pre-feasibility study on the San Francisco project. The pre-feasibility study is currently focused on evaluating the viability of exploiting the 716,800 ounce measured and indicated and 63,500 inferred gold mineral resource on the property. While several elements of the study are nearing completion management is also assessing the viability of alternative extraction processes to improve upon historical recoveries in light of the current price environment. In addition management believes there is significant opportunity to expand the resource both in the immediate area of the current resource and in other satellite deposits and targets on the 40,000 hectare property.
For further information, contact:
Bruce Bragagnolo, LLB.,
Vancouver, BC, Canada
Darcy Krohman, P.Geo., C.A.
Senior Vice-President & CFO
Vancouver, BC, Canada
For Investor Relations, contact:
Vancouver, BC, Canada
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