TORONTO, ONTARIO--(Marketwired - May 29, 2014) - Samco Gold Limited (TSX VENTURE:SGA) ("Samco", "Samco Gold" or the "Company") today announces a binding letter of intent has been signed with Pan American Silver Corp. ("PAS") to grant PAS the exclusive option (the "Option") to acquire a 60% interest in the El Dorado- Monserrat project in Santa Cruz, Argentina ("EDM"). The parties intend to participate in the exploration and development of EDM leading to the commencement of mining activities at the project.
As preconditions to PAS exercising its Option PAS is to conduct further work, including drilling at EDM equivalent to at least US$2 million, followed by the preparation of a technical report. Upon exercising the Option PAS is to make a one-time payment to the Company of US$5 million. Funding for the development of the project may be provided by PAS up to certain limits and pursuant to certain lending criteria which could have the effect of reducing the Company's interest in the project to 30%. The intention is for the formation of a jointly owned company (the "Operating Company") through which to commence mining operations at EDM. Additional dilution may occur after commercial production if a party does not provide its share of ongoing costs. If either party is diluted to less than a 10% interest in the Operating Company that party's interest will automatically convert to a 2% NSR. PAS will have day-to-day management control of the Operating Company. The letter of intent terminates if a definitive agreement between the parties' Argentinean subsidiaries has not been entered into by October 1, 2014.
Commenting on the transaction, Charles Koppel, Executive Chairman and CEO of Samco Gold said:
"This is an extremely attractive partnership for Samco and confirmation of the significant potential of the El Dorado-Monserrat property. We are looking forward to working with Pan American's high quality team with the joint intention of bringing the project through to production. In addition, we will not only benefit from their exploration and operational expertise, but also from the synergies with their nearby Manantial Espejo mine."
About the El Dorado-Monserrat Property
The El Dorado-Monserrat project covers an area of approximately 8,000 hectares and is situated adjacent to AngloGold Ashanti's major Cerro Vanguardia gold mine and approximately 150 kilometres from Pan American's Manantial Espejo mine.
Prior to its acquisition by Samco, the El Dorado and Monserrat properties had been the subject of a number of exploration campaigns conducted by different operators in joint venture. Prior to the 2012 drill program by Samco of approximately 18,000 meters (see www.samcogold.com/News for historic press releases and presentations detailing results), Aur Resources' gold division conducted an extensive surface and shallow drilling campaign over certain of the principal targets on the properties.
About Samco Gold Limited
Samco Gold's principal business is the acquisition, exploration and development of precious metals resource properties in Argentina. The Company's principal mineral property is the El Dorado-Monserrat epithermal gold project, located in the Deseado Massif region of Santa Cruz Province, Argentina. With an experienced board and management team including a strong Argentinean compliment, the Company's goal is to become an Argentinean producer of gold and silver through the exploration and development of EDM. Samco Gold also owns a portfolio of other mineral exploration properties in the Deseado Massif.
Additional details on the Company are available on SEDAR (www.sedar.com).
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.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, assumptions, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, concluding the definitive agreement with PAS and the exercise by it of the Option, ability to obtain or delays in securing project financing; changes in EDM project parameters as plans continue to be refined; future prices of gold and silver; possible variations in grade or recovery rates; failure of equipment or processes to operate as anticipated; labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or in the completion of exploration, as well as those factors disclosed in Samco Gold's disclosure documents publicly available under the Company's profile on the SEDAR website at www.sedar.com. Although Samco Gold has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not intend, and does not assume any obligations, to update forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by applicable securities laws.