PREMIER GOLD MINES LIMITED (TSX:PG) (“Premier”, “the Company”) is pleased to announce that it has closed the acquisition of a 100% interest in the Cove-McCoy Gold Property, located along the Eureka-Battle Mountain Trend in Nevada, from Newmont Mining Corporation (NYSE:NEM) (“Newmont”). In securing the acquisition, Premier paid Newmont US$15 Million at closing, replaced bonding of approximately US$4 Million via a surety policy and transferred to Newmont all land sections that comprise the South Carlin Property. In addition, Premier will make staged payments to Newmont over 18 months equal to US$6 million. Further details of the transaction are provided below.
The acquisition provides key benefits to Premier including:
- 100% interest in the consolidated Cove-McCoy Property package (now totaling 31,000 acres or 48 square miles) in the heart of one of the world’s most productive gold districts.
- Elimination of “back-in” rights previously held by Newmont as well as a revision of the royalty terms held by Newmont from a “potential” 5.0% Net Smelter Royalty (NSR) to a 1.5% NSR.
- The potential to define near-surface heap leachable mineralization at McCoy that could be prioritized towards development.
- Existing infrastructure, including lined heap leach pads that could potentially be utilized under a renewed development scenario.
- A “good faith efforts” processing arrangement with Newmont over a 10-year period within a 12-year window for ores mined at Cove-McCoy.
- Premier will retain a 1.5% NSR in the South Carlin Property interests.
The consolidation of this district-scale project provides complete exposure and flexibility to explore and develop the Cove and McCoy deposit areas (see Image 1) while also securing a commitment to process some ores potentially mined at predetermined toll rates over a 10 year period. Premier believes that a world-class exploration/production opportunity exists at Cove-McCoy and will direct its efforts in the near-term on advancing the heap leachable (open pit) opportunity while also evaluating the full extent of primary structures that link the deposits.
“The Cove-McCoy district remains a highly underexplored property package in a region known for hosting multi-million ounce gold deposits” stated Ewan Downie, President and CEO of Premier. “This important acquisition secures for Premier a 100% interest in a property that offers the potential to define both open pit and underground mineralization. Our recent discovery of the 2201 Zone immediately below the historic Cove open pit mine demonstrates the potential for new mineralization including gold, silver and base metals.”
The Cove-McCoy Gold Mines have historic production of some 3.3 million ounces of gold and 110.0 million ounces of silver between 1986 and 2006, a 20-year period of relatively low to historically low gold and silver prices. The mines are believed to have a close genetic relationship, associated with the same fault/feeder structures; however the ores mined occurred in different rock units. The feeder structures between the mines have seen only limited previous exploration and represent a priority future exploration target.
The McCoy lands contain significant infrastructure including existing heap leach pads, buildings, and other assets that could potentially allow for aelerated minesite development.
Image 1 - Cove-McCoy Property outline
Based on historic drilling at the McCoy Mine, Premier believes that there exists excellent potential to delineate open pit-style mineralization immediately adjacent to the historic pit and drilling of this target will commence in early October. Additionally, previous drilling below the McCoy underground mine workings indicates the potential for higher-grade gold/silver mineralization at depth and a compilation of geophysical and geochemical data has identified several priority anomalies that will be near-term drill targets as outlined below.
Geophysical Anomaly: A large geophysical (induced polarization) conductor was identified immediately north of the McCoy pit that remains untested. Additional geophysical surveying will be completed in advance of drilling during the current campaign.
Surface Target: Premier personnel recently completed surface and rock chip sampling on a prospective surface target located to the northwest of the Cove pit in a priority target area referred to as “Windy Point”. This sampling identified consistent surface mineralization over an area 100 metres by 60 metres with assay values of up to 12.98 grams per tonne gold (g/t Au). This target has been tested by limited historic drilling and will be the subject of future exploration, including drilling and trenching, in an effort to assess the potential for both open pit and underground mineralization.
The Cove-McCoy Gold Project is located along the Eureka-Battle Mountain Trend that is host to numerous multi-million ounce producing and past-producing mines and is located close to excellent infrastructure (including paved roads & power) and is permitted for an expanded surface drill campaign and underground access.
Premier holds several projects that are subject to ongoing exploration and development programs in 2014. An updated mineral resource estimate at the Hardrock Project which lies within the Company’s 100%-owned Trans-Canada Property will provide the basis of the preparation of a Feasibility Study, expected in H1-2015. Underground drilling, testing several target areas is underway from the haulage drift in Red Lake on the Rahill-Bonanza Project (PG 49% and Red Lake Gold Mines 51%).
Stephen McGibbon, P. Geo., is the Qualified Person for the information contained in this press release and is a Qualified Person within the meaning of National Instrument 43-101. Assay results were sent to Inspectorate America Laboratories prep facility located in Elko, Nevada and analysis was performed at their Sparks, Nevada analytical facility utilizing 30 gram fire assay with an AA finish for RC samples and 30 gram fire assay with AA finish and ICP-MS 30 element scan from 4-acid digestion for Core samples.
Premier Gold Mines Limited is one of North America’s leading exploration and development companies with a high-quality pipeline of gold projects focused in proven, safe and accessible mining jurisdictions in Canada and the United States. The Company is fully financed with a portfolio of advanced-stage assets in world class gold mining districts such as Red Lake and Geraldton in Ontario and the most prolific gold trends in Nevada.
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 strategic plans, including future operations, future work programs, capital expenditures, discovery and production of minerals, price of gold and currency exchange rates, timing of geological reports and corporate and technical objectives.. 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 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.