A 10,000m drilling programme on the property has returned significant grade in intercepts such as 21.2m grading 7.66 grams per tonne gold and 1,270.2g/t silver, which it reported in May.
"With the success we've seen with our drilling, the time is right to acquire ownership of the Los Ricos concessions and royalty. Our track record of developing assets and monetising royalties, like our Santa Gertrudis sale, should increase shareholder value and provide future financing optionality from the royalty," said president and CEO Brad Langille.
The accelerated acquisition of the Los Ricos properties will save GoGold US$5.4 million. The company will pay $500,000 upon signing the new agreement. $3.2 million and 9 million shares, both paid in instalments over 24 months. Total consideration for the acquisition is $7.1 million based on the company's closing share price on August 21.
The option agreement will replace stipulated staged payments of over $1.5 million over five years plus a 2% net smelter returns royalty on five of the concessions, with a lump sum payment of up to $11 million if GoGold decides to exercise the option.
Los Ricos, about 100km north-west of Gaudalajara, covers over 22,000 hectares and is home to several historical mining operations. There are 65 historical drill holes on the property and the majority intercepted mineralisation from near surface.
GoGold has also entered into an agreement to acquire the existing 2% net smelter returns royalty on the Los Ricos property $1 million paid in installments over 36 months and 4.9 million shares to be delivered in instalments over an 18-month period.
The company has completed 44 holes for 6,891m in the current drilling campaign, which commenced in March. It has focused on testing the top 200m of the mineralised zone to determine the potential for surface mining. This has included twinning selected historical reverse circulation (RC) drill holes, infill drilling on 25m centres, deeper holes down dip beneath the historical RC drill holes; testing the strike extension of the deposit to the north of underground workings and stepping out 1,500m to the south where the company developed exploration trenches.
Shares in GoGold Resources (TSX:GGD) are trading at C49¢, valuing the company at $83 million.
