Here Is NR from Hawkeye Gold
HAWKEYE SIGNS $4.5 MM LOI FOR NEAR TERM PRODUCTION JV-MEXICO
Hawkeye Gold & Diamond Inc. has entered into a letter of intent (LOI) with a third party independent vendor to purchase a 50-per-cent interest in the La Cobriza project for $4.5-million (U.S.). The property is a gold and silver project located 125 kilometres 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 kilometres east of Cobriza.
La Cobriza project highlights
The project lies in the centre 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. Peter Megaw (January, 2004) to National Instrument 43-101 standards, however, the report was not an NI 43-101-compliant document.
There are five concessions totalling approximately 854 hectares, and to date there are four known structures in the Cobriza group and five known structures in Temehuaya.
There is a 40-tonne-per-day flotation mill that can be operational, located 1,000 metres 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 totalling 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). Its 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 and 6,000 grams per tonne of silver and five to 11 grams per tonne of gold at the heart/centre of the vein. High-grade pockets as high as 38,000 g/t Ag and 270 g/t Au have previously been encountered. According to the previous owner, consistent grades of between 600 and 700 g/t of Ag and 1.5 to three 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 three to five m wide, and one reportedly runs to eight m in places. Samples reported by Legerman (1976) yielded up to 2.6 g/t Au, 323 g/t Ag, 0.76 per cent zinc and 2 per cent copper. 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 1800s 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 1.5 g/t Au and 622 g/t Ag.
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 NI 43-101 standards, however, these reports are not NI 43-101-compliant documents. The first report was issued in 2004 by Dr. 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 an NI 43-101-compliant report.
High-grade Au-Ag low sulphidation 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 may earn a 50-per-cent interest in the La Cobriza project by paying $4.5-million to the vendor. The LOI provides for a 45-day due-diligence period (DDP) allowing the company 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 three 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 per cent of the projects net cash flow. At the time HGO earns its 50-per-cent 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 (Nov. 4, 2016);
$50,000 no later than Nov. 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 Toronto Stock Exchange 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-million after TSX acceptance for the DOPA, but no later than one year and two months from signing of the LOI;
$500,000 after TSX acceptance for the DOPA, but no later than one year and six months from signing of the LOI;
$500,000 after TSX acceptance for the DOPA, but no later than two years from signing of the LOI.
Notes: use of proceeds
The amounts in sections 1, 2, 3 and 9 totalling $700,000 will be paid to the vendor.
The amounts in sections 4, 5, 6, 7, 8, 10, 11 and 12 totalling $3.8-million are 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 chief executive officer, 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 NI 43-101 standards. However, these reports are not NI 43-101-compliant documents. During Hawkeye's due-diligence period, the company will have a qualified person (QP), as defined under NI 43-101, 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 believes to be true. Upon completion of the due-diligence period management will file an NI 43-101-compliant report.
Rex property
With regret, the company announces the return of the Rex property to the vendor and no longer owns an interest in the claims.
Hawkeye's website
Hawkeye Gold & Diamond is currently updating its website to inform the investment community of its new business model. It 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 the company's website
