Brisbane, April 7, 2008 AEST (ABN Newswire) - The Directors of Republic Gold Limited (ASX: RAU)("Republic" or the "Company") today announce that Republic has entered into a transaction with Vista Gold Corp ("Vista Gold") of North America to purchase the 720,000 ounce Amayapampa Gold Project in Bolivia ("Project").
Key Points
- The Amayapampa Gold Project has an estimated Mineral Resource of 720,000 ounces of gold, 92% of which is in the measured and indicated categories.
- Republic pays no money upfront to Vista Gold and will eventually pay Vista Gold US$3,000,000 plus a royalty after the Project reaches commercial production.
- Much of the work required to complete the Bankable Feasibility Study for the Project has already been completed.
- The Company sees the Canadian market as likely destination for the Project and it's financing.
- The Company recently employed a number of new staff for its Mareeba Head Office with the view to aggressively pushing the Company's Far North Queensland projects.
Republic's Managing Director; John Kelly, said:
"The Company's previous efforts in Bolivia were criticised due to the complicated structure of the deal with Luzon Minerals Limited of Canada. The current transaction is very simple and gives Republic ownership of Amayapampa for the payment of US$3,000,000 after commercial scale gold production commences at the Project, with an attendant gold royalty. Vista Gold actively engaged Republic for this transaction because it understood Republic's experience with the Project, and that the Company has a highly experienced technical team. Republic has gained a thorough understanding of the resources business in Bolivia in the past few years, and this transaction makes great use of the Company's previous significant effort in Bolivia. Concurrently with the Bolivian experience, the Company has also gained considerable experience with the Canadian markets, which it sees as the ultimate destination for the Project and it's financing. Discussions with a Canadian broker were part of Republic's due diligence for the purchase of the Project. This transaction complements Republic's existing projects in Far North Queensland by providing significant additional near-term production potential of a similar orogenic geological style. The Company has employed a number of new technical staff at its Mareeba Head Office in the past month and will be pushing its Far North Queensland projects aggressively when the wet season finishes."
Amayapampa has a current estimated Mineral Resource of 720,000 ounces of gold, as detailed below. The Company believes this Mineral Resource has significant potential for expansion. The Project also has significant potential for the discovery of the antimony mineral, stibnite. Amayapampa has been extensively drilled and the extensive underground workings have been sampled as well. All the necessary other work to complete a Bankable Feasibility Study such as metallurgical testwork, plant design and environmental studies have completed on the Project.
This transaction increases the Company's Mineral Resource base by 276% to 1,218,000 ounces of gold, plus 8,000 tonnes of stibnite, as detailed below.
Transaction Details
Republic is buying all of the shares in Vista Gold's wholly-owned subsidiary, Vista Gold (Antigua) Corp, a company incorporated in Antigua and Barbuda ("Vista Gold (Antigua)"). Vista Gold (Antigua) wholly-owns a number of subsidiary companies in Bolivia, including Minera Nueva Vista S.A. which is the registered holder of the concessions that comprise the Amayapampa Project.
The Company pays Vista Gold no cash upfront and will pay three equal payments of US$1M, the first once commercial production has commenced at the Project and then on the first and second anniversaries of this occurrence.
The Company will also pay a graduated royalty to Vista Gold according to the following table.
Gold Price: US$/oz Royalty Payable to Vista Gold$500.00 or less 0.00%$500.01 to $650.00 2.00%$650.01 to $750.00 3.00%$750.01 and above 3.50%
The royalty is capped to a production maximum of 720,000 troy ounces of gold.
In buying the chain of companies from Vista Gold, Republic will be taking over the responsibility for litigation commenced against Minera Nueva Vista S.A. by Mrs Gladys Radic. Vista Gold has agreed to loan the Company US$350,000 for six months in large measure to finalise this litigation. Both Vista Gold and the Company believe the litigation is completely without merit.
Vista Gold has a first right of refusal over the Project. Vista Gold also has a right of repurchase of the Project if the Company hasn't completed financing to put the Project into production within 5 years of the Closing. Vista Gold will pay the Company 75% of the aggregate costs incurred by the Company on the Project if this repurchase right is exercised.
The agreement provides a list of warranties by Vista Gold with a warranty period of 12 months.
Update on the Amayapampa Project
Since the Company ceased involvement with Amayapampa approximately 12 months ago, the Project has been advanced significantly. The main issue the Company had been dealing with previously had been social issues in the village of Amayapampa and surrounding communities. The Bolivian senior employees of Minera Nueva Vista S.A. have significantly advanced this issue with the commencement of a training programme for the villagers. A total of 280 people are employed under this programme, giving many of them a guaranteed income in safe working conditions for the first time in their lives. The programme is designed to give the villagers literacy and numeracy skills and then train them for mine operations roles. During the Company's due diligence, a meeting was held in the village with over 200 of those people employed under the training programme. The spirit of this meeting and its outcome was excellent.
The second major advance with the Project was the granting in mid-2007 of a new Environmental Permit for the mine. This work was commenced under the Company's guidance. During the Company's due diligence, the Company met with the Prefecto of the Department of Potosi (equal to a State Premier in Australia) and his Mining and Environmental Advisors who were all responsible for guiding this Permit through the Potosi permitting system.
The Company also met with Bolivia's Minister for Mining and Metallurgy who assured the Company that Western investment in the mining sector in Bolivia was very welcome and very safe.
Work Required to Progress the Project
Vista Gold completed a number of Bankable Feasibility Studies culminating in a final study in 2000. Luzon Minerals Limited partially updated this last study in an NI 43-101 report that was accepted by the Toronto Ventures Stock Exchange as a Scoping Study in 2006. When the Company's involvement in the Project was terminated 12 months ago, it had nearly completed a fully updated Bankable Feasibility Study with the main exception being a detailed study on a new tailings dam, which it had started work on.
The following work is seen as necessary to complete a Bankable Feasibility Study for Amayapampa in order that financing for the Project can be sought: -
- Continue the workers' training programme.
- Review the geological block model constructed by the Company.
- Finalise pit optimisation and mine scheduling work.
- Complete a study on the new tailings dam.
- Update the operating and capital costs for the project.
- Gain a sign-off on the study by an independent consulting firm.
- Finalise issues with the metallurgical processing route and plant design.
Monthly operating costs for Bolivia are anticipated to be approximately $110,000. The cost to complete the feasibility study is estimated at $300,000. The Company will also need to finalise an old transaction commenced by Minera Nueva Vista S.A. to buy 25% of some of the concessions at Amayapampa for US$500,000.
Inward Investment into Bolivia
There is continual and significant inward investment into Bolivia mainly from North American companies. Coeur d'Alene Mines Corp. is about to commission it's US$174M San Bartolome Silver Project in Potosi. Apex Silver Mines Limited has been operating its +US$750M San Cristobal Silver Project for approximately 12 months. In February, Atlas Precious Metals Inc. announced a transaction with the Bolivian state mining company, COMIBOL, to buy into the Karachipampa smelting complex for US$141M. Eighteen months ago Jindal Steel and Power Ltd. from India announced a +US$2B deal with the Bolivian Government for the El Mutun iron ore project.
Potential of Bolivia
The purchase of Vista Gold (Antigua) and the Subsidiaries gives the Company a base in Bolivia with a small number of staff that it has worked closely with before. One of the senior staff is a pre-eminent and highly respected mining engineer in Bolivia who has a wide knowledge of the Bolivian mining industry. The other senior staff member is a lawyer who is highly experienced in the Bolivian mining industry through her long association with Vista Gold and other mining companies.
As Amayapampa and other projects the Company knows of are in identical geological settings to those found in the Company's Hodgkinson Basin project area and in Central Victoria, the Company considers that the Altiplano region of Bolivia has strong economic potential. The Company will actively seek other projects in Bolivia to complement its knowledge and understanding of the geology of the region.
The Directors of the Company see this transaction as another step in building a gold company with substantial mineral resources and ore reserves. To pursue this important goal, the Company has recently employed a number of new staff for its Mareeba Head Office with the view to aggressively pursuing the Company's existing Far North Queensland projects.
Contact
John Kelly
TEL: +61-418-577-759
Tony Nagy
TEL: +61-413-645-126
| ||
|
