Premier Enters Into Definitive Agreement To Acquire The High-Grade Cove Gold Project In Nevada
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PREMIER GOLD MINES LIMITED (TSX:PG) (“Premier”)
is pleased to announce that it has entered into a definitive purchase
agreement for the acquisition of the 100% interest in the Cove Gold
Project, located within the Eureka-Battle Mountain Trend in Nevada, of
Victoria Gold Corp. (TSX-V:VIT) (“Victoria”).
The acquisition of Cove will solidify Premier’s United States-based project portfolio. Premier’s management team believes that Nevada is one of the world’s most favourable jurisdictions for mine development and the Cove project offers upside in the existing mineral resource areas and opportunities for the discovery of new high-grade gold deposits.
Premier’s management team believes that the Cove project represents one of the most under-explored gold projects in Nevada. The project is located within the Eureka-Battle Mountain Trend that is host to a number of multi-million ounce producing and past-producing mines. The Cove deposit was mined (primarily by open pit) between 1988 and 2001, a period of comparatively low metal prices, producing approximately 2.6 million ounces of gold, and 100 million ounces of silver. The target-rich 6,972 hectare property (17,252 acres) has been subject only to limited surface exploration outside of the Cove pit and Premier believes that the property offers potential for the discovery of additional mineralized zones and horizons. Importantly, the property is located in close proximity to excellent infrastructure (including paved roads and power). A Plan of Operations for underground exploration has been submitted to the appropriate federal agency and is anticipated to be approved in the third quarter of 2012.
Premier intends to evaluate the entire property and will include exploring favourable structural intersections, follow-up on historic high-grade drill intercepts, and test the Gold Dome Fault that was host to the historic gold Dome Mine, whose production in the 1930’s maintained grades between 0.25 oz/t and 2.00 oz/t gold.
The aggregate consideration for the acquisition is $28 million payable over a two-year term including $8 million on closing (with Premier having the option to satisfy up to one-half of all such payments in common shares of Premier). Upon delivering a positive feasibility study containing a minimum of 500,000 ounces of gold or gold equivalent on the property, Newmont McCoy Limited (“Newmont”) has the option to enter into a joint venture and hold a 51% interest in the project by paying 250% of the aggregate expenditures incurred on the property since March 2006.
As additional consideration for the acquisition of the Cove project, in the event of production from the Cove project, Premier will pay Victoria $20 million (with Premier having the option to satisfy up to one half of such amount in common shares of Premier) payable in four instalments of $5.0 million each upon the cumulative production, to Premier’s account, of 250,000, 500,000, 750,000 and 1,000,000 troy ounces of gold from the project.
Premier will reimburse Victoria for the exploration costs incurred by Victoria in respect of the exploration and related activities conducted on the Cove project by Victoria between March 15, 2012 and the closing date of the acquisition. In addition, Premier has agreed to expend at least $7,000,000 on or relating to exploration and development of the Cove project (inclusive of the reimbursed exploration costs) prior to the first anniversary of the closing date of the acquisition.
The transaction is subject to conditions normal for a transaction of its nature, including the approval of the Toronto Stock Exchange and is expected to close on or about June 12, 2012.
Nevada Exploration Manager
Premier would also like to announce that Mr. Warren Thompson has been retained as Exploration Manager for Nevada. Mr. Thompson holds a Masters Degree in Geology and has more than 29 years of professional exploration experience in supervision and management of exploration and advanced development gold projects. Warren has played an important role in numerous discoveries and deposit development projects, most recently having managed the development drilling and modeling of the Long Canyon deposit for Fronteer Gold (now Newmont) and co-managed Gold Standard Ventures’ North Bullion gold discovery near Premier’s South Carlin (Saddle) Projects.
Warren previously held roles as Project Geologist at the Lone Tree and Twin Creeks Mines for Santa Fe Pacific Gold and was Senior Exploration Geologist for Barrick Gold in the Battle Mountain Trend including the Pinson Exploration Joint Venture project.
Premier holds several projects that are the subject of exploration programs in 2012. Recently, the haulage drift in Red Lake crossed onto the Rahill-Bonanza Project (PG 49% and Red Lake Gold Mines 51%) that is located in close proximity to Goldcorp’s Red Lake Gold Mines infrastructure. A new gold horizon is being defined on the East Bay Project (PG 35% and 50% - JV with RLGM) and is located on the same structural trend along strike from Rubicon Mineral’s F2 Zone deposit on its Phoenix Gold Project. Several drills are active on the 100%-owned Trans-Canada Project, which is host to several deposits with multi-million ounces of mineral resources. A revised resource estimate is anticipated from three separate deposits in the near future.
Premier and Newmont USA Limited, a subsidiary of Newmont , continue to work towards an arrangement that will consolidate the Saddle and Rain projects within the Rain Sub-district of Nevada’s Carlin Trend. Premier intends to focus much of its Nevada exploration and development efforts on the Cove project. The acquisition of Cove and the Saddle/Carlin projects represent two of several opportunities Premier is evaluating in the United States having near-term development potential and long-term exploration upside. Premier views the United States as a geologically and politically attractive vehicle for its future growth.
The scientific and technical information contained in this press release was reviewed and approved by Stephen McGibbon, P. Geo., Executive Vice-President Corporate & Project Development of Premier, and a Qualified Person for the purposes of National Instrument 43-101.
Premier Gold Mines Limited is one of North America’s leading exploration companies with a high-quality pipeline of projects focused in proven, safe and accessible mining jurisdictions in Canada and the United States. The Company’s portfolio includes significant assets in world class gold mining districts such as Red Lake, Musselwhite and Geraldton in Ontario and the Carlin Trend in Nevada.
For further information, please contact:
Ewan Downie, President & CEO
Web Site: www.premiergoldmines.com
This press release contains certain information that may constitute “forward-looking information” under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about the closing the Cove project acquisition, strategic plans, future operations, future work programs, capital expenditures, discovery and production of minerals, price of gold and currency exchange rates, timing of geological reports, mineral resource estimates, corporate and technical objectives and closing of the acquisition of Cove Project. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risk that regulatory approvals for the acquisition of Cove project will not be obtained, risks inherent to the mining industry, adverse economic and market developments and the risks identified in Premier’s annual information form under the heading “Risk Factors”. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. Premier disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.