PREMIER GOLD MINES LIMITED (TSX:PG)
is pleased to announce that it has signed a letter of intent ("LOI") to sell its interest in the Pickle Crow Gold Project (the "Project") in northwestern Ontario to an unrelated privately held Ontario company, PC Gold Inc., which has been created specifically to consolidate ownership interests in the Project. PC Gold intends to raise financing and implement a major program of exploration and development on the Project, with the intent of returning the past-producing Pickle Crow Gold Mine to production, and to eventually complete a transaction to become a public issuer. Upon receipt of all payments, Premier will receive the equivalent of $5.3 million in cash and shares of PC Gold, and will retain a 0.5% Net Smelter Return Royalty ("NSR") with respect to any future gold produced from the Project.
Under the terms of the LOI, Premier will receive $1.5 million in cash and $3.8 million in shares of PC Gold under the following terms:
1) $25,000 cash within two weeks of signing;
2) $475,000 cash and $3.8 million in shares of PC Gold on closing of the transaction;
3) $250,000 cash on the 6 month anniversary date;
4) $250,000 cash on the 12 month anniversary date;
5) $500,000 cash on the 18 month anniversary date;
6) PC Gold will retain the right to purchase Premier's NSR at any time for the sum of $2.5 million.
The Project is host to the past-producing Pickle Crow Gold Mine that produced 1.47 million ounces of gold between 1935 and 1966, and closed in a low gold price ($35/oz) environment. The Pickle Crow Gold Mine is found within the Uchi geological subprovince, the same belt of rocks in which the mines at Red Lake, Ontario, are found. A considerable body of historical data exists which suggests the mine shut down with resources in place, and untapped open pit and underground exploration potential. The Project also hosts a new mill built by a private partner in the Project who will also be consolidating its interest into PC Gold.
"The sale of Pickle Crow, a non-core asset of the company, will augment our already strong financial position" stated Ewan Downie, President of Premier. "The proceeds of the sale will be used for the further development of our core projects, and may be used to help fund further strategic acquisitions by the corporation".
In other news, drilling continues with three drill rigs at the Rahill-Bonanza Project in Red Lake, a joint venture with Red Lake Gold Mines, an affiliate of Goldcorp Inc (TSX:G NYSE:GG). The Rahill-Bonanza project is located immediately west of, and along strike from, the Red Lake Gold Mines complex. Additionally, drilling with two drills is underway at the Geraldton Project in northwestern Ontario, a joint venture with Roxmark Mines Limited (TSXV:RMK)
Premier Gold Mines Limited is a Canadian-based mineral exploration and development company with diverse property holdings that include several projects and deposits in Northwestern Ontario and a joint venture in Mexico. In the Red Lake gold mining camp, two of these are operated in joint venture with Goldcorp Inc. (TSX:G).