SOURCE: Colorado Goldfields Inc.
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March 13, 2008 08:00 ET
Colorado Goldfields Inc. Announces Letter of Intent to Acquire 75% Interest in Producing Mexican Silver Company
LAKEWOOD, CO--(Marketwire - March 13, 2008) - Colorado Goldfields Inc. (OTCBB: CGFI) (the
"Company") today announced the signing of a Letter of Intent to acquire 75%
of the shares of Besmer, S.A. de C.V. ("Besmer"), of Durango, Mexico, from
existing shareholders.
Besmer is currently operating the El Barreno, Remedios, and La Zacatecana
mines in the states of Zacatecas and Durango, Mexico, and also operates the
Bocas Hacienda flotation mill near Suchil, Mexico.
The El Barreno Mine is located in close proximity to Pan American Silver
Corp.'s El Conjuro silver property in the Chalchihuites mining district in
Zacatecas State. The Chalchihuites mining district has a very long history
of high grade silver production dating from the Spanish conquest to the
present time. The El Barreno property has multiple silver-lead veins and
mantos. Colorado Goldfields intends to examine options to increase
production at El Barreno as part of its due diligence.
The Remedios Mine is also located in the Chalchihuites mining district in
Zacatecas State. The Remedios Mine has two known lead-silver bearing
mantos, with reported ore grades up to 30% lead and varying silver content.
Multiple silver-bearing veins are located on the property. Colorado
Goldfields intends to examine locations for a potential new production
portal as part of its due diligence.
The La Zacatecana Mine property is located at La Parilla, Durango State.
The La Zacatecana property is adjacent to First Majestic Silver Corp.'s La
Parilla property, which is reported to mine and mill approximately 800 tons
per day. The mineralization at La Zacatecana is silver and base metal in
vein.
Besmer's mill at Bocas Hacienda processes silver-bearing ores through
differential flotation. The mill currently ships its concentrates to the
Penoles smelters located at Torreon, Mexico. This mill is currently
processing ore from Besmer's three mines and accepts ore from small local
miners. Colorado Goldfields intends to examine the feasibility of expanding
the mill's capacity to 500 metric ton per day capacity. The mill has
associated laboratory, administrative and shop buildings.
The Letter of Intent contemplates a purchase price of $3 million, with
$750,000 payable at closing and the balance of $2,250,000 payable over a
four year period with 6% interest on the unpaid balance, in exchange for
75% of the shares of Besmer. In addition, if the acquisition is made,
Colorado Goldfields will agree to provide up to $5 million to expand
production at the mines and mill; on a loan basis to Besmer. A 2% Net
Smelter Royalty to Besmer´s current shareholders on the existing Besmer
owned concessions can be extinguished within a four year period for a
payment of $350,000. Colorado Goldfields has also agreed to pay a business
brokerage fee to two individuals who introduced the Besmer prospect to the
company.
The Letter of Intent calls for a
60-day due diligence and exclusivity period and Goldfields personnel are
currently conducting a geological and technical evaluation of the Besmer
properties to ensure due diligence requirements are fulfilled. Under the
terms of the agreement, either party may withdraw from the Letter of Intent
during the 60-day due diligence period. In addition, the Letter of Intent
will automatically terminate if definitive agreements are not entered into
by May 25, 2008. However, in connection with the execution of the Letter
of Intent, Colorado Goldfields paid the sellers a $50,000 earnest money
deposit, and such deposit is
non-refundable unless material discrepancies are discovered with respect to
Besmer's financial, legal, property ownership or environmental matters or
operating conditions. Colorado Goldfields intends to raise capital within
the next few months to complete this potential acquisition, although no
assurance can be made that Colorado Goldfields will be successful in
raising the required funds.
Todd Hennis, President of Colorado Goldfields Inc., states, "The potential
Besmer acquisition gives us the opportunity for immediate production with a
profitable company, at a time of record precious and other metal prices. It
gives us the further opportunity to greatly expand existing production as
we simultaneously prepare for potential gold production at the Silverton,
Colorado, properties which we have under option. We view the potential
operations in Mexico as strongly complementary to our efforts in Colorado
and consistent with our core strengths. We believe the economics of silver
production in Mexico are compelling, and the Chalchihuites mining district
has all the characteristics we are looking for."
Mr. Hennis went on to say, "We are extremely positive about these
opportunities and for the continuation of our work on the Silverton
properties. It's a very exciting time for Colorado Goldfields Inc. and we
look forward to continued progress and building value for our
shareholders."
On Behalf of the Board,
Colorado Goldfields Inc.
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Todd C. Hennis, President
Notice regarding forward-looking statements
This news release may contain forward-looking statements or information
within the meaning of the United States Private Securities Litigation
Reform Act of 1995.
Forward-looking statements or information include statements regarding the
expectations and beliefs of management.
Forward-looking statements or information include, but are not limited to,
statements or information with respect to known or unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by
such forward-looking statements or information. Forward-looking statements
or information are subject to a variety of risks and uncertainties which
could cause actual events or results to differ from those reflected in the
forward-looking statements or information, including, without limitation,
risks and uncertainties relating to obtaining financing to meet the
Company's exploration program and operating costs during its exploratory
stage, the interpretation of exploration results and the estimation of
mineral resources and reserves, the geology, grade and continuity of
mineral deposits, the possibility that future exploration, development or
mining results will not be consistent with the Company's expectations,
accidents, equipment breakdowns, title matters, or other unanticipated
difficulties with or interruptions in production and operations, the
potential for delays in exploration or development activities or the
completion of feasibility studies, the inherent uncertainty of production
and cost estimates and the potential for unexpected costs and expenses,
commodity price fluctuations, currency fluctuations, regulatory
restrictions, including the inability to obtain mining permits and
environmental regulatory restrictions and liability, the speculative nature
of mineral exploration, dilution, competition, loss of key employees, and
other risks and uncertainties, including those described under "Risk
Factors" in the Company's Annual Report on Form 10-KSB filed on December
27, 2007, which is on file with the Securities and Exchange Commission, as
well as the Company's other SEC filings. Should one or more of these risks
and uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those described in
forward-looking statements. Accordingly, readers are advised not to place
undue reliance on forward-looking statements or information. The Company
does not undertake any obligation to release publicly revisions to any
"forward-looking statement," to reflect event or circumstances after the
date of this news release, or to reflect the occurrence of unanticipated
events, except as is required under applicable securities laws. This press
release may also contain information about adjacent properties on which the
company has no right to explore or mine. We advise investors that the SEC's
mining guidelines strictly prohibit information of this type in documents
filed with the SEC. Investors are cautioned that mineral deposits on
adjacent properties are not indicative of mineral deposits on our
properties.