VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 7, 2016) - HAWKEYE Gold & Diamond Inc. (the "Company" or "HAWKEYE") (TSX VENTURE:HGO)(FRANKFURT:HGT) (ISIN: CA42016R3027) (WKN: A12A61): is pleased to announce it has entered into a Letter of Intent (LOI) with a third party independent vendor (the "Vendor") to purchase a fifty per cent (50% ) interest in the La Cobriza Project (the "Project") for US$4,500,000. The Property is a Gold and Silver project located 125 kilometers Northeast of Mazatlan and 150 km West Northwest of Durango City, Durango Mexico, and is next to the Tayoltita mine of Primero Mining Corp. The Temehuaya claim which forms part of the La Cobriza group is located approximately 25 kilometers East of Cobriza.
La Cobriza Project Highlights
• The project lies in the center of the famous San Dimas mining district where high-grade Gold-Silver veins were discovered around the year of 1757 (Dahlgren, 1882). The district has produced an estimation of 9.5 million ounces of Gold and 750 million ounces of Silver, according to the Qualifying Report written by Dr. Megaw (January 2004) to NI43-101 standards, however, the report was not a NI43-101 compliant document.
• There are 5 concessions totaling approximately 854 hectares, and to date there are 4 known structures in the "Cobriza Group" and 5 known structures in "Temehuaya"
• There is a 40 tonne per day floatation mill that can be operational, located 1000 meters from the mine. With a moderate amount of upgrades to the ball mill and water supply, the plant can achieve an estimated capacity of 120 tonnes in a relatively short period of time.
• The flotation plant is located on privately owned land totaling one hectare. In 2018 an option may be exercised to purchase a total of 280 hectares including the aforementioned one hectare. The plant site was chosen due to the fact that beneficiation activities have always existed on site since early last century. Therefore, this plant was "pre-existing" to the change in the mining law that occurred in 1985 and it is classified as an "old plant" (Grandfathered). It's regulations are different and therefore the final permit is easily achieved. Production can restart before the final permitting process has concluded.
• Historically, in Cobriza, the high grade pockets have sampled between 4,000-6,000 gr/tonne of Ag and 5-11 gr/tonne of Au at the heart / center of the vein. High grade pockets as high as 38,000 gr/tonne Ag and 270 gr/tonne Au per ton have previously been encountered. According to the previous owner, consistent grades of between 600 and 700 gr/tonne of Ag and 1.5 to 3 grams Au have been sustained throughout the previous production period.
• The Temehuaya Area consists of tilted Lower Volcanic Complex Andesites cut by several roughly parallel N35-50E (60NE) trending quartz veins and quartz veinlet stringer zones. At least two are 3-5m wide, and one reportedly runs to 8m in places. Samples reported by Legerman (1976) yielded up to 2.6 g/T Au, 323 g/T Ag, 0.76% Zn, and 2% Cu. These are comparable with Tayoltita, and San Dimas District style veins and would be the exploration targets. Temehuaya is a very high quality undeveloped vein target area where potential is high, but infrastructure is poor (as it was at Tayoltita before Luismin (Goldcorp) became active in the area).
Cobriza is an old Spanish mine that has had extensive work done on it since the early 1800's and the 20th century. More recently, it has been explored, but has also seen occasional production since 2006. The properties have not been explored systematically with modern methods such as Diamond Drilling. In 2006, the Mexican Government financed ($40,000 U.S) for a small study to show the value of Cobriza's reserves, which confirmed 12,000 tons with grades of Au 1.5 and Ag 622 g/tonne.
The first modern studies conducted on the mine were undertaken by Olagaray and Madero, who calculated the potential at over 3,750,000 tonnes. Multiple studies have been conducted, including Buen Paso 1996, FIFOMI, COREMI, and a Qualifying Report (Megaw 2004) and a Technical Report (Sookochoff 2007) written to NI43-101 standards, however, these reports are not NI43-101 compliant documents. The first report was issued in 2004 by Dr. Peter Megaw; the second study was issued in 2007 by Dr. Lawrence Sookchoff, which confirmed the merits of the Cobriza Project. Management believes the information provided herein, and in confidence, to be true and factual and will undertake to verify this information through due diligence culminating in a NI43-101 compliant report.
High-grade Au-Ag Low Sulfidation epithermal veins with high-grade ore clavos have been intermittently mined on the Cobriza property and will be a primary exploration focus.
Terms of Deal
HAWKEYE Gold & Diamond Inc. may earn a fifty (50%) interest in the La Cobriza Project by paying $4,500,000 to the Vendor. The LOI provides for a forty-five day due diligence period (DDP) allowing HGO time to complete a site visit and evaluation of the Property. As part of the due diligence exercise, Hawkeye intends to conduct a detailed mapping and sampling exercise as well as a review of the processing plant and a detailed analysis of the cost of rehabilitating the existing plant. This work is expected to take 3 months. Upon HAWKEYE electing to move forward with the Property after the DDP, the terms and conditions of the LOI will be incorporated into a definitive option purchase agreement (DOPA) and forwarded to the TSX Venture Exchange for acceptance. The LOI provides that upon HGO expending a total of $600,000, the Company secures the right to earn 50% of the projects net cash flow. At the time HGO earns its 50% interest, the DOPA will transition into a standard mining JV Agreement between the parties.
The payment schedule, in U.S. dollars, is as follows;
- $75,000 paid on signing of the LOI (November 4, 2016);
- $50,000 no later than November 11, 2016;
- $125,000 payment 30 days from signing the LOI;
- $350,000 payment 45 days from signing the LOI (end of due diligence period);
- $350,000 after TSX acceptance for the DOPA, but no later than 75 days from signing of the LOI;
- $350,000 after TSX acceptance for the DOPA, but no later than 105 days from signing of the LOI;
- $250,000 after TSX acceptance for the DOPA, but no later than 135 days from signing of the LOI;
- $500,000 after TSX acceptance for the DOPA, but no later than 180 days from signing of the LOI;
- $450,000 after TSX acceptance for the DOPA, but no later than 270 days from signing of the LOI;
- $1,000,000 after TSX acceptance for the DOPA, but no later than 1 year and 2 months from signing of the LOI;
- $500,000 after TSX acceptance for the DOPA, but no later than 1 year and 6 months from signing of the LOI; and
- $500,000 after TSX acceptance for the DOPA, but no later than 2 years from signing of the LOI.
NOTE: Use of Proceeds
- The amounts in sections a), b), c) and i) totaling $700,000 will be paid to the Vendor.
- The amounts in sections d), e), f), g), h), j), k), and l) totaling $3,800,000 is designated for Capital Expenditures (CAPEX) for work programs, upgrading and/or purchase of new mining equipment to advance the project.
Greg Neeld, Hawkeye's President and CEO commented, "While the La Cobriza project is early stage, the project has been a past producer. We are attracted by the reported grades, widths, and strikes of the known mineralized structures, its proximity to a known high grade Au-Ag deposit, and the presence of an existing Mill. Near-term Gold and Silver production for HAWKEYE is consistent with HAWKEYE's new Corporate model for acquiring projects with cash flowing opportunities and Blue Sky Discovery upside. Cash flow positive projects will provide HAWKEYE with the ability to self-finance its projects, reduce dilution, resulting in increased shareholder value".
NI 43-101 Compliant
Information relating to the La Cobriza Project provided within this news release is based upon historical figures that has been extracted from public sources and a Qualifying Report (Megaw 2004), a Technical Report (Sookochoff 2007), written to NI43-101 standards. However, these reports are not NI43-101 compliant documents. During HAWKEYE's due diligence period, the Company will have a Qualified Person (QP), as defined under NI43-101, and a professional Mining Engineer visit the property to evaluate the property and milling facilities, verifying the information within this news release, reports referred to herein, which management believe to be true. Upon completion of the due diligence period management will file a NI43-101 compliant report.
With regret, the Company announces the return of the REX Property to the Vendor and no longer owns an interest in the claims.
HAWKEYE Gold & Diamond Inc. is currently updating its website to inform the investment community of our new Business Model. We will be uploading information relating to the La Cobriza Project in due course. For further information regarding HAWKEYE and the La Cobriza Project, please frequently visit our website at www.hawkeyegold.com for updates or contact us through any of the methods provided below.
Further news relating to the La Cobriza Project will be forthcoming.
About the Company
HAWKEYE Gold & Diamond Inc. is a junior mineral exploration and development company based in Vancouver, British Columbia, Canada and is publicly traded on the TSX Venture Exchange under the trading symbol HGO and the Frankfurt Exchange under the ticker HGT; ISIN# CA42016R3027 and WKN# A12A61. HAWKEYE's Corporate mandate is to build strong asset value through acquisition of low-cost high potential cash flowing Mining production opportunities with Blue Sky Discovery upside, manage our business activities in an environmentally responsible manner while contributing to the well-being of the local Community and Economy. Our goal is significant growth through Revenue and Cash flowing Projects, ultimate production through Discovery on our Blue Sky properties, to provide early return on investment and significant growth to maximize shareholder value.
HAWKEYE GOLD & DIAMOND INC.
Greg Neeld, President & CEO
Neither the 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.
Cautionary Notes Regarding Forward Looking Statements
This News Release contains forward-looking statements. Forward-looking statements are statements that relate to future events. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our industry, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.