Cerro Resources NL

Cerro Resources NL

December 13, 2010 09:04 ET

Cerro Resources Acquires Namiquipa Silver Project, Mexico; Placement

MONTREAL, QUEBEC--(Marketwire - Dec. 13, 2010) - Cerro Resources NL (ASX:CJO)(TSX VENTURE:CJO) ("Cerro" or "Company") is pleased to announce it has entered into a share purchase agreement ("Agreement") with all the shareholders ("Minera Shareholders") of Minera Tasmania S.A. de C.V., a company incorporated under the laws of Mexico ("Minera"), to acquire 100% of the issued shares in the capital of Minera ("Minera Shares"). 

Minera has the legal and beneficial interest in, or the right to obtain the legal and beneficial interest in the Namiquipa Silver Project, Chihuahua State, Mexico ("Namiquipa Project").


  • 4,400 ha Namiquipa silver exploration project in Chihuahua State, Mexico
  • Includes former La Venturosa silver mine
  • Mine records indicate 14.37moz silver + 32,550t lead produced from 1.156mt mined oxide/sulphide material + 43,530t zinc from just sulphide material
  • Prospective for Fresnillo-style silver-lead-zinc vein systems
  • Potential complementary to Company's Cerro del Gallo heap leach gold potential cash flow (2012)
  • Consideration is 30M Company shares to be issued for 100% ownership
  • Transaction requires shareholder, regulatory and other approvals

About the Project

The Namiquipa Project (Figure 1) is located in the Municipality of Namiquipa, Chihuahua State, Northern Mexico, approximately 145 kilometres west-north-west of the city of Chihuahua. The Project is within the Namiquipa Mining District adjacent to the village of El Terrero.

Figure 1: Location Plan is available at the following address: http://media3.marketwire.com/docs/locationplan.pdf

The Project consists of three concessions totalling 4,400 hectares and includes the La Venturosa silver mine, which was the site of underground mining operations for silver, lead and zinc from 1929–1936, 1948–1955 and 1990-2002. Mining was on a very small scale in the 1929-1936 period and no records were examined from this period. More extensive mining took place in the latter two periods when both oxide and sulphide resources were exploited. A summary of the production from these periods is given below (Table 1). Mining has taken place over a strike length of just 1,250m and to a depth of only 250m. Mining ceased due to flooding and low metal prices.

  Material Mined (tonnes) Silver Production (oz) Lead Production (tonnes) Zinc Production (tonnes)
Oxide 214,127 3,890,000 5,556  
Sulphide 522,629 6,719,500 19,669 36,939
Oxide 341,557 3,182,900 4,892 -
Sulphide 80,100 578,700 2,433 6,591
Oxide 555,684 7,072,900   -
Sulphide 602,729 7,298,200   43,530
TOTAL PRODUCTION 1,158,413 14,371,100 32,550 43,530
Table 1: La Venturosa recorded production

Minera controls the mineralized trend to north and south of the La Venturosa Mine, where there has only previously been reconnaissance exploration undertaken. Several high priority targets have already been flagged including areas where mining occurred to depths of only 100m and along strike in both directions from the existing mine workings.

The Namiquipa Project area is hosted by Tertiary age volcanics deposited in the Early to Middle Miocene. Namiquipa is one of a series of deposits hosted in the rocks of Northern Mexico's Upper Volcanic Series and lies within the Ag-Pb-Zn epithermal belt. The mineral assemblages present and the associated hydrothermal alteration suggest that mineralisation is a low to intermediate sulfidation type. As such and considering the levels of silver at Namiquipa it is strongly analogous to the Fresnillo-style of polymetallic vein systems which are silver rich and gold poor. Fresnillo in Zacatecas State in north central Mexico is the world's largest primary silver producer and Mexico's second largest gold producer, with substantial lead and zinc credits.

Figure 2: Titles to the Property available at the following address: http://media3.marketwire.com/docs/property.pdf

The Namiquipa Project consists of The Tasmania Concession; The America Concession; and The Rolys Concession (Figure 2). Minera owns the Tasmania and Rolys Concessions and has the right to acquire the America Concession from Minera Rio Tinto S.A de C.V, a company incorporated under the laws of Mexico, under an option agreement dated 22 July 2008 and varied by further agreement on 24 September 2010.

A technical report on the Namiquipa Project will be filed on SEDAR in accordance with Canadian NI 43-101.

The technical information in this release was reviewed by Mr John Skeet, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Skeet is the Chief Operating Officer of Cerro Resources NL. He has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2004 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and "qualified persons" as this term is defined in Canadian National Instrument 43-101 ("NI 43-101").

The Acquisition Terms

Under the terms of the Agreement, Cerro's wholly-owned subsidiary Cerro Namiquipa Pty Ltd will acquire all of the Minera Shares from the Minera Shareholders, being all the issued and outstanding shares of Minera (so that Minera will become a wholly-owned subsidiary of Cerro), and in exchange Cerro will issue 30 million ordinary shares in Cerro to the Minera Shareholders.

There is no cash payable to the Minera Shareholders and Cerro has sufficient funding to undertake an initial work program on the Namiquipa Project if the acquisition is completed.


Related Party: In accordance with the Corporations Act and the ASX Listing Rules and TSXV Policies, the acquisition of the Minera Shares constitutes a related party transaction, given Norman Seckold, the Company's Chairman, owns fifty percent of the Minera Shares. Because Mr Seckold is a related party to Cerro, the proposed transaction is subject to Shareholder approval in general meeting. The meeting is anticipated to be held in late January or early February 2011 and a date will be announced when the regulatory timetable is finalised. Shareholders will be provided with an Independent Expert Report which will consider the transaction and whether it is fair and reasonable to the shareholders of Cerro. Copies of the Independent Expert Report will be included in the notice of meeting that will be sent to shareholders.

The proposed transaction is also a "related party transaction" within the meaning of Canadian Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on the exemption in Section 5.5(a) to the requirement for a formal valuation and the exemption in 5.7(a) to the requirement for the "minority approval" of shareholders. These exemptions are available to the Company because neither the fair market value of the Minera Shares being acquired nor the fair market value consideration for their acquisition exceeds 25% of Cerro's market capitalization. The Company's market capitalization at the time the transaction was agreed was approx A$68M (the "Market Capitalization").

Other Conditions: Completion of the transaction is also subject to a number of other conditions, including:

  1. the receipt of all required regulatory approvals and stock exchange approvals; and
  2. completion of technical, financial and legal due diligence to the satisfaction of Cerro

The Agreement requires the Minera Shareholders to enter into escrow agreements in relation to the Cerro shares issued as consideration, for 12 months or such longer time as the ASX or TSXV request in accordance with their regulatory processes. 

The transaction cannot close until all such approvals are obtained and conditions met or waived by Cerro as applicable. To this end there can be no assurance that the transaction will be completed as proposed or at all.


The Board of Cerro Resources hold the view that the Namiquipa Project offers considerable potential for shareholders of the Company and that Mexico provides significant quality exploration opportunities. The physical presence of personnel on the ground in Mexico with a history of working in that country and their understanding of the geology of Mexico naturally encourages a greater presence in that region.

The intention to seek access to additional precious metals exploration opportunities in Mexico was signalled by the company in its quarterly report to shareholders for the period ended 30 September 2010 and at the Annual General Meeting of shareholders. Projects sourced and reviewed will be based upon historical workings and / or known mineral provinces. Grass roots exploration will only be incidental to such a project. The Namiquipa Project fits this criteria.

The Company is seeking to expand its interests in order to have a pipeline of projects to assess and progress. The Namiquipa Project is compatible with and complementary to the timing for development of and potential positive cash flow from the Company's Cerro del Gallo gold heap leach project in 2012.

The dual listing of the Company's shares on the TSXV and the presence of the Company in the North American market with appropriate appointments to management are also consistent with the objectives.

PLACEMENT - Cerro's other Project Funding

As Cerro moves to completion of the feasibility study on the gold silver heap leach production at Cerro del Gallo and as results are received on the Mt Philp Iron Ore Project, the Company considers it appropriate to raise a small amount of funds to assist with those activities and for working capital purposes.

Patersons Securities Limited ("PSL") has been engaged to assist and manage the capital raising to sophisticated investors. More details will be announced as soon as possible to allow the Australian trading halt to be lifted.

About Cerro Resources

Cerro Resources is a precious and base metals exploration and development company. The Company is currently focused on developing the Cerro del Gallo gold/silver project in the central state of Guanajuato, Mexico. The Company also maintains an active working focus on the Mt Isa exploration project, Queensland, Australia.

Additional information about the Company is available on the Company's website at www.cerroresources.com and on SEDAR.

Forward-Looking Information

This news release contains certain "forward-looking information" under Canadian securities laws. All statements that address future plans, activities, events or developments that the Company believes, expects or anticipates will or may occur are forward-looking information. Specifically, this news release contains forward looking information about the completion of the proposed acquisition and the potential of the Namiquipa project. Forward looking information is based upon assumptions by management that are subject to known and unknown risks and uncertainties beyond the Company's control, including risks related to mining exploration and the availability of financing for companies such as the Company. There can be no assurance that outcomes anticipated in the forward looking information will occur, and actual results may differ materially for a variety of reasons. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information, except as may be required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Cerro Resources NL
    Tony McDonald
    Managing Director
    +61 7 3252 0122
    Cerro Resources NL
    Craig McPherson
    Chief Financial Officer
    +61 7 3252 0122
    Cerro Resources NL
    John Skeet
    Chief Operating Officer
    +61 7 3252 0122
    For North America, please contact:
    Ms Gerri Paxton
    Manager Investor Relations