GUAMUCHIL, Mexico NEVADA PACIFIC GOLD of Vancouver has agreed to buy the Magistral mine in the Sinaloa State from Toronto's QUEENSTAKE RESOURCES. The deal calls for the payment of US$4 million cash and the issuance of 2 million common shares of Nevada Pacific on closing, anticipated to occur in early February 2004. A final payment of US$3 million will be made to Queenstake six months after the closing date. Production from the Magistral mine is subject to a sliding scale net smelter return royalty.
Queenstake poured the first gold bar from Magistral on Oct. 10, 2002. Net development costs were only US$10 million for a pit and heap leach operation. Through its subsidiary Pangea Resources, Queenstake holds 42.5% of the mine and is the operator. Unfortunately, Magistral costs have been high, and Queenstake says it is concentrating its efforts on its recently-acquired Jerritt Canyon gold mine in Nevada.
Before mining began, proven and probable reserves were 6.99 million tonnes grading 2.07 g/t Au, according to Nevada Pacific. The feasibility report estimated an annual production rate of about 40,000 oz of gold recoverable by heap leaching. The new owner plans to expand reserves and resources and to optimize production.
Nevada Pacific has interests in several other gold properties in Nevada. Information is posted at www.nevadapacific.com.