MegumaGold Corp (CSE:NSAU) said Monday that it has struck an option agreement with Genius Metals Inc (CSE:GENI) to acquire up to a 100% interest in six mineral exploration licences totalling 100 claims on 1,620 hectares directly adjoining the company’s Touquoy West licences to the east and St Barbara Ltd’s licenses to the west.
The Genius licences encompass the interpreted western extension of the Moose River trend which hosts St Barbara Ltd’s operating Touqouy Gold Mine, its Beaver Dam and Fifteen Mile stream development projects.
The Canadian junior gold exploration company said in combination, these deposits contain current proven and probable mineral reserves of 1.9 million contained gold ounces.
In 2020, the Touquoy Gold Mine is expected to produce 95,000-105,000 ounces of gold at all-in-sustaining-costs of between US$630-$670 ounces, making it one of the lowest cost producers in the world.
MegumaGold’s work has recently been concentrated in the Touquoy West Project area and has been successful in defining large arsenic in soil trends that are locally supported by corresponding elevated gold results.
These features are developed along the interpreted west extension of the Moose River anticline that hosts the open pit Touquoy Gold Mine. The company believes that this structure can be traced along an aeromagnetic trend that extends from the Touquoy Mine area southwesterly across St Barbara Ltd holdings and then across the Touquoy West holdings.
At that point, it appears to continue beyond MegumaGold’s west property boundary onto the optioned Genius property. The western arsenic and gold in soil trend identified by recent company work is approximately 2,200 meter (m) in strike length at present, has a width ranging between 100 and 700 m, and remains open along strike to the southwest onto the Genius claims, said the company.
"We’re very pleased to come to this agreement with Genius. The Moose River anticline is a very long anticlinal trend that hosts multiple gold deposits in its eastern and central areas, which has seen very little exploration work in the west,” said MegumaGold President Theo Van der Linde.
“The acquisition of this group of licenses is great real estate for MegumaGold since a large, recently defined arsenic and gold anomaly on the company’s adjoining Touquoy West property trends directly onto the newly acquired Genius claims,” he added.
Terms of the agreement
According to the pact, the company may earn up to a 70% interest in six Genius mineral exploration licences by satisfying the following conditions:
• MegumaGold must issue to Genius within ten business days from the effective date, 250,000 shares which are subject to a statutory four months and one day hold period. In addition, 50% of the shares are subject to a contractual one-year hold period.
• Initial 49.9% earn-in: In order to earn the initial 49.9% interest in the property, MegumaGold must within 18 months from the effective date, launch initial exploration work on the property relating to an initial exploration program made up of ground surveys to pre-drilling targeting work, totalling at least $100,000.
• Additional 20.1% Earn-In: In order to earn an additional 20.1% interest in the property, MegumaGold must within 12 months from the initial Earn-In obligations, incur a diamond drilling program on the property, totalling at least $150,000.
• On MegumaGold fully exercising the option to earn 70% of the property, Genius shall have the option to convert its remaining 30% interest in the property, into a 2% net smelter royalty, resulting in MegumaGold owning a 100% interest in the property, and Genius owning a 2% net smelter royalty. The terms of the net smelter royalty will be negotiated between Genius and MegumaGold, and will include a term whereby Meguma will have an option to acquire 50% of the 2% NSR for $1 million, leaving Genius with a 1% net smelter royalty.
MegumaGold holds a package of 107,114 hectares within the well-known Meguma gold district in Nova Scotia.
Contact the author Uttara Choudhury at [email protected]
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