Premier Gold Mines (PG.TSX) announced 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. The emerging gold Company noted that the acquisition supports its 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.
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 C$20 million.
* The Helen Zone deposit at Cove 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
* 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
Ewan Downie, President and CEO of Premier Gold Mines:
“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. 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.”
Premier Gold Mines Management:
“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.”