RCG ANNOUNCES ACQUISITION OF PREVIOUS PRODUCING GOLD MINES AND CENTRAL PROCESSING MILL IN NOVA SCOTIA, CANADA
Resource Capital Gold Corp. (RCG.V) will acquire a 90-per-cent ownership interest of the Dufferin gold mine located in Nova Scotia, as well as surrounding historical gold mines including the Tangier and Forest Hill mines.
Resource Capital’s immediate focus is resuming production at Dufferin. It is anticipated that operations can resume within 120 days, and the milling facilities there are planned to act as a central processing hub for the surrounding projects when production from these operations are brought on stream.
Overview of Dufferin gold mine and other assets acquired
The Dufferin gold mine is a fully permitted operational underground gold mine. The project comprises 874 hectares in 54 mineral claims that are all in good standing. The property contains over 14 east-west-trending “saddle reef” quartz vein structures, situated in a vertical assemblage, each hosting free milling gold. These saddle reef structures are open at depth and along strike for over 1.4 kilometres.
The mine is currently on care and maintenance, with production last occurring in 2014. Resource Capital has a project turnaround plan and team in place so that production can recommence within 120 days of the transaction being closed. The mine has a 300-tonne-per-day gravity floatation mill and all necessary infrastructure in place to conduct full-scale gold mining operations.
The company has engaged MineTech International Ltd. of Halifax, N.S., to prepare a preliminary economic assessment (PEA) of the Dufferin project. The PEA is expected within September, and will be filed as soon as it is available.
The Tangier gold mine is located 30 kilometres from the Dufferin mine. It has a 43-101-compliant resource of 41,700 ounces of gold in the indicated category (134,000 tonnes grading 9.67 grams per tonne gold), and 131,500 ounces of gold in the inferred category (271,000 tonnes grading 15.09 grams per tonne gold). The mine sits on a project area of 2,187 hectares in 135 exploration claims.
The Forest Hill mine has a 43-101-compliant resource of 173,800 ounces of gold in the indicated category (225,000 tonnes grading 24.02 grams per tonne gold) and 152,900 ounces of gold in the inferred category (383,000 tonnes grading 12.42 grams per tonne gold), and sits on a project area of 3,398 hectares in 210 exploration claims.
Attractive acquisition terms
Resource Capital will acquire the interest in Dufferin for a total consideration of $9.5-million (U.S.) plus a net smelter royalty (NSR) of 1 per cent. Of the $9.5-million (U.S.), $1.1-million (U.S.) is payable upon settlement (with $400,000 (U.S.) already paid in the form of a purchase deposit). The remaining $8-million (U.S.) is payable in equal instalments over the following five years, with the NSR payable from the fifth year. Closing is expected to occur on or before Sept. 30, 2016.
The acquisition of the interest in Tangier and Forest Hill is being accomplished through the acquisition of Flex Mining and Exploration Ltd., the owner of the properties. The company will acquire Flex Mining and pay $1.5-million, $100,000 of which has been paid as a deposit. The closing is expected to occur on or before Oct. 15, 2016.
The Tangier and Forest Hill projects also have exploration upside in addition to the value that can be unlocked from production of known mineral resources.
Turnaround plan to unlock value at the Dufferin mine
Resource Capital has identified a highly experienced team of underground mining professionals that have a record of turning around underground mining operations, including the Lucky Friday mine in Idaho, the Giant mine in the Northwest Territories and the Pamour mine in Ontario.
Resource Capital’s chairman and chief executive officer George Young commented: “The Dufferin transaction transforms RCG into a gold producer in a very short period of time. We have every confidence that we can unlock considerable value from this mine. Our experienced underground mining team envisions unlocking the project’s true value.
“The acquisition of these projects is in line with RCG’s previously stated goal of acquiring low-capex precious metals projects in North America that are either in the development phase or producing. Concurrently, we are also committed to the development of our silver assets in Nevada through the joint venture on the Corcoran Canyon project. We look forward to updating shareholders on this project and other opportunities in the near term.”
Recommencement of mining operations is intended to be financed through debt. Discussion with potential financiers is continuing.
The scientific and technical data contained in this news release were reviewed and prepared under the supervision of David Smith, MS, MBA, CPG, who is a qualified person under National Instrument 43-101 — standards of disclosure for mineral projects.