VanGold Mining (TSXV: VGLD) announced that it has entered into a definitive agreement with Endeavour Silver (TSX: EDR) (NYSE: EXK) this morning to acquire the El Cubo mine and mill complex. The transaction will see the property acquired for US$15.0 million, with up to US$3.0 million in additional contingent payments.
The acquisition was performed by VanGold as a result of its neaby El Pinguico silver-gold project, which is 8 kilometres down the road. The company will effectively be combining the two properties, enabling the company to begin processing mineralized material later this year from both historic stockpiles at El Pinguico, as well as from current resources at El Cubo.
The purchase by VanGold will see the company acquire 7,000 hectares of mining concessions located adjacent to El Cubo, as well as the El Cubo floatation mill, which also includes a current resource of 3.2 million ounces of silver and 39,860 ounces of gold on an indicated basis, as well as 10.0 million inferred ounces of silver and 129,900 inferred ounces of gold. On a combined basis with the firms already owned property, total resources on the project now amount to 7.2 million indicated ounces of silver equivalent, and 20.4 million inferred ounces of silver equivalent.
VanGold will now look to refurbish the El Cubo mill, enabling processing of up to 750 tonnes per day, with processing set to begin in the fourth quarter. The current PEA for the project estimates a mine life of 7 years at this rate of production, with a base case net present value with a 5% discount of $32.9 million, resulting in an internal rate of return of 105%. The PEA is based on $19.49 silver and $1,527 gold.
The acquisition of the property will consists of several payments, including US$500,000 as a down-payment, US$7.0 million in cash on closing, a US$2.5 million promissory note with an expiry of twelve months from closing, and US$5.0 million in VanGold shares at a price of $0.30 per share, which results in the issuance of 21.3 million shares.
VanGold Mining last traded at $0.61 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
The Grocery Grift: Why Toronto and New York Are About to Light Taxpayer Money on Fire