American Eagle Gold (TSX-V:AE) Corp said that it has struck an assignment agreement with Standard Ore Corp., to assume all interest in a lease with an option to purchase agreement between Standard Ore and Rubicon Resources for a 100% interest in the Cerros Rojos property, located 150 kilometers (km) south of Newmont's Long Canyon mine in Nevada.
The Nevada-focused exploration company inked the assignment agreement on September 13, 2021, and it is subject to the approval of disinterested shareholders and the TSX Venture Exchange.
Cerros Rojos had historical near-surface oxidized gold drill intercepts, one of which measured 12.2 meteres at 0.57 grams per tonne (g/t) gold from surface, said the company. “This indicates the potential for a new gold deposit in a previously undeveloped part of Nevada,” it said. It is believed that the system is structurally controlled, extending along low-angle structures to the west beneath the overlying Devonian Joana limestone, it added. The initial focus of the exploration will be Carlin-style deposits.
American Eagle said the drill-identified mineralization at Cerros Rojos is hosted by Devonian/Mississippian Pilot shale. “This setting is similar to the Alligator Ridge complex of deposits operated by Kinross Gold 100 km to the west, as well as Fiore Gold's Pan mine 125 km to the southwest,” noted the company. Alligator Ridge and other Pilot-hosted deposits in eastern Nevada have produced more than 2 million ounces of gold.
"Cerro Rojos is an opportunity to follow up on a highly prospective discovery hole of oxide gold material within a potential new deposit in eastern Nevada,” American Eagle Gold (TSX-V:AE) CEO Anthony Moreau said in a statement.
“We view this property as possibly representative of part of a new district analogous to nearby systems such as Kinross' Alligator Ridge," he added.
American Eagle Gold plans to explore the property, starting with digitizing historic surface data and then undertaking field exploration work and geophysical surveys to delineate targets for a drill program to begin in late spring 2022.
Following the assignment agreement, the company has agreed to assume all of the rights and interests in the lease for payment to Standard Ore of an aggregate of C$47,839.92 in cash. "The company assumes Standard Ore's rights to Cerros Rojos at Standard Ore's exact cost with zero cash or share mark up to acquire interest in the property," noted the company.
Terms of the agreement
To maintain the lease in good standing, the company must make advanced royalty payments to Rubicon as follows:
- A cash payment of US$5,000 every six months for the first five years of the term of the lease;
- A cash payment of US$10,000 every six months beginning on the fifth anniversary of the effective date of the lease during the duration of the term of the lease.
- The advanced royalty payments will continue under the lease until commercial production kicks off at the Cerros Rojos property. On the commencement of commercial production, the company has assumed the obligation to pay a 3% net smelter return royalty to Rubicon on all production from the property.
- The net smelter return royalty may be reduced to 1% through the repurchase of the royalty at 1% increments at a price of US$1,000,000 per increment.
Following the terms of the lease, the company has the right to ultimately purchase the Cerros Rojos Property at any time on the payment of US$100 in cash. However, such a buy does not impact the company's obligation to make the advance royalty payments.
The TSX Venture exchange has provided conditional approval, provided that the transaction receives shareholder approval no later than April 30, 2022.
The company said it will seek shareholder approval at the company's Annual General Meeting in April 2022.
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