| ||Radius Gold Inc (TSX-Venture: RDU-V))is pleased to announce that it has signed an agreement to explore and develop the El Pavon epithermal vein camp ("El Pavon") in central Nicaragua with Meridian gold (Toronto: MNG; NYSE: MDG). |
The agreement gives Meridian the exclusive option to acquire a 60% interest in El Pavon by spending an agreed amount on exploration, completing a feasibility study within four years and paying to Radius a set amount per ounce of resource defined by the feasibility study for the 60% of the ounces Meridian will acquire.
Meridian will spend not less than US$3,500,000 in exploration expenditures over the first 2 years of the agreement with the objective of establishing a drill-indicated resource at El Pavon of at least 1,000,000 ounces that can subsequently be developed into a mineable reserve. This expenditure includes completion of at least 15,000 metres of drilling which is to commence as soon as permits are acquired. In addition, at least 20% of the $3.5-million will be spent drilling the veins and trends surrounding and external to Pavon North, Pavon Central and Pavon South. A minimum of US$1-million is to be spent on further exploration in each of years 3 and 4.
Meridian may terminate the Option at any time after spending the $3,500,000 by providing 30 days prior written notice to Radius. If Meridian does not meet the US$3.5-million expenditures on or prior to the second anniversary date of the Agreement, or Meridian withdraws from or terminates the Agreement before making such Committed Expenditures, Meridian will pay to Radius the difference between the amount spent and the commitment of US$3.5-million in cash.
Upon completion of a positive Feasibility Study, Meridian will pay Radius a pre-determined price for its earned share of the mineral resources, including reserves and credits for by-products, estimated in the feasibility study to be situated on the property. Once Meridian has purchased its 60% share of the mineral resources, it will have acquired an undivided 60% interest in the Property. The price to be paid by Meridian to Radius for the resources will be:
• $40 per ounce of gold if average gold prices are less than $400 per ounce;
• $50 per ounce of gold if average gold prices are equal to or greater than $400 per ounce but less than $500 per ounce;
• $60 per ounce of gold if average gold prices are equal to or greater than $500 per ounce; and
• $0.50 per ounce of silver if average recoverable silver grades for the resources exceed 100 g/t.
When Meridian has exercised its Option and acquired a 60% interest in the Property, Meridian and Radius will establish a joint venture in respect of the Property on a 60/40 basis. Further development of El Pavon will then be funded by the Joint venture partners in proportion to their participating interests. Meridian will be the Operator of the Joint Venture as long as it has at least a 50% interest in the Joint Venture.
Meridian will use its best efforts to obtain all the necessary permits to allow construction to commence as soon as the permits have been obtained. Provided that the IRR (internal rate of return) of the project as set out in the Feasibility Study meets an agreed level, Meridian will commence construction of a mine on the Property immediately after all necessary permits have been obtained. Meridian will also arrange or provide non-recourse financing on behalf of Radius on reasonable commercial terms for the development of a mine on the Property.
Commenting on the agreement, Simon Ridgway, the President of Radius said "We're very pleased to have reached this agreement with Meridian and are looking forward to working with them. Their experience of exploring for and mining epithermal gold vein systems in Latin America will ensure that the full potential of El Pavon will be tested. This agreement also allows Radius geological staff to focus on what we are good at -- finding more undiscovered gold systems in Nicaragua. We believe there is much more gold to be found there yet."
The El Pavon low sulphidation epithermal vein system was discovered by Radius in 2003. Quartz-adularia veins are hosted by a series of intermediate to felsic volcanic lavas, ignimbrites and tuffs. Radius' field teams have identified at least 6 potentially major veins or mineralized structures on the property within an area covering at least 10km by 4km. Most of the work to date has focused on the Pavon North and Pavon Central veins.
Radius recently drill tested El Pavon at five sites along the 6km strike length of the Pavon South, Central and North veins. The purpose of the holes was geotechnical; to determine the general dip of the vein structures and allow proper siting of drill pads for a larger drill program currently being permitted by Radius. The results include best intersections of 16.8m grading 10.3 g/t Au and 5.8m grading 11.3 g/t Au from holes located 4km apart testing the same mineralized structure. Full results from the drilling and collar locations can be found on the Radius Gold web site (www.radiusgold.com).
Mr. Harmen Keyser, P.Geol., a Director of Radius, is the Qualified Person as defined in NI 43-101, and has verified that the results presented in this press release have been accurately summarized from the drill data provided to the Company from the field teams.
The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of this release.
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