PREMIER GOLD MINES LIMITED (PG:TSX) is pleased to announce it has signed a Letter of Intent (LOI) with Sutter Gold Mining Inc. (SGMI; SGM.V) to jointly explore the Santa Teresa mineral concession, located in the historic and high grade El Alamo District of Baja California Norte, Mexico. The concession is accessible by road, located 10 kilometres west of Highway 3, some 100 kilometres southeast of Ensenada and about 250 kilometres from San Diego,California, USA.
This proposed joint venture (JV) meshes well with Premier’s NW Ontario assets as:
- It is located within a proven (some 220,000 ounces of past production) gold district.
- Historical data indicates that mined grades within the district are between 1.00 and 2.00 ounces per ton (opt).
- The majority of district production occurred within 120 metres of surface, but remains open at depth.
- It has characteristics similar to the historic Mother Lode District of California.
The Santa Teresa Concession (STC) is located adjacent to and on strike from the past-producing Princessa Mine (the district’s largest gold producer), whose orebody was known to extend close to the STC boundary. Data suggests that extensions of the Princessa Mine along strike and at depth have not been tested.The
El Alamo District’s gold production halted at its peak owing to technological and political circumstances early in the 20th century, thus presenting a unique opportunity to the JV today. The mineralization in the district is characterized by common visible gold hosted within narrow and near-vertical quartz veins associated with felsic intrusives.
Premier’s senior management experience in the Red Lake District of NW Ontario coupled with Sutter’s experience in the Mother Lode District of California makes this JV team extremely well-suited to exploring the El Alamo District successfully. Stephen McGibbon, Premier’s COO and former Goldcorp Inc. Chief Geologist inRed Lake commented that “we envision excellent potential to discover high grade ore bodies in the El Alamo District given its strong history, and insufficient exploration.” Further he commented that “while this is an early stage project, it is expected that initial exploration could yield very exciting results.”
Premier will earn an initial 50% interest in the project by:
- Making payment of 100,000 shares of free-trading Premier stock to SGMI.
- Completing US$1.5 million in exploration and property acquisitions within two years, including US$1 million within one year of signing the JV agreement.
- Reimbursing SGMI for all payments (~US$225,000) over a four-year period to the original vendor of the property.
In addition, Premier has secured the right to earn an additional 15% interest in the JV (for a total interest of 65%) by making a further cash payment of $500,000 to SGMI and conducting an additional US$4.0 million in exploration on the property. SGMI will be the initial operators of the project, however, Premier can take over as operator once it secures a greater than 50% interest in the project.
Ewan Downie emphasized “Premier is fully funded in 2007 to meet its obligations to the Santa Teresa Project as well as its commitments in Red Lake. Our Mexican venture will not impair progress on our flagship Red Lake JV with Goldcorp Inc. and allows the company to pursue a premier high-grade opportunity.”
Stephen McGibbon, P.Geo., Executive Vice-President and Chief Operating Officer of Premier, 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.
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). A strategic project is also located on the main Musselwhite Gold Mine trend (Goldcorp-Kinross).