Murgor Resources Inc. (MGR: TSX-V) has announced that it has entered into a definitive Exploration and Option Agreement with Victoria Gold Mines Limited under which Murgor has the option to acquire up to a 70% interest in the Golden Arrow Gold Mine located 65 kilometres east of Timmins, Ontario, as referred to in Murgor's press releases of November 4, 2010 and January 14, 2011.
"Murgor is very pleased to have finalized this agreement with Victoria and we are looking forward to a long and fruitful partnership." said André Tessier, President and Chief Executive Officer of Murgor Resources. "A 43-101 technical report is currently being prepared by an arm's length Qualified Person and should be ready very shortly. Drilling is scheduled to begin later this month so we can get on with the business of proving ounces at the Golden Arrow Mine. Murgor's objective is near-term production at Golden Arrow."
At the closing of the transaction, Murgor made a $500,000 cash payment and issued 10 million common shares to Victoria Gold Mines at a deemed price of $0.18 per share. The cash and shares are currently being held in escrow pending receipt of final approval for the transaction from the TSX Venture Exchange. In order to obtain final approval, Murgor must provide the TSX Venture Exchange with, among other things, a technical report on the property comprising the Golden Arrow Gold Mine which is compliant with National Instrument 43-101 Standards of Disclosure for Mineral Projects. Murgor expects that the technical report will be delivered shortly.
In order to acquire an interest in the Golden Arrow Mine, Murgor must first incur $1 million in exploration expenditures on the Golden Arrow Mine and issue an additional 5 million common shares to Victoria Gold Mines within six months of signature of the Exploration and Option Agreement. Murgor will then acquire an initial 30% interest in the Golden Arrow Mine by incurring an additional $1 million in exploration expenditures and making a payment to Victoria Gold Mines of $500,000 in cash or Murgor shares within one year of signature of the Exploration and Option Agreement.
In order to earn an additional 10% interest in the Golden Arrow Mine, for a total 40% interest, Murgor must incur an additional $1 million in exploration expenditures within 18 months of signature of the Exploration and Option Agreement.
In order to earn an additional 15% interest in the Golden Arrow Mine, for a total 55% interest, Murgor must incur an additional $1 million in exploration expenditures and make a payment to Victoria Gold Mines of $1 million in cash or Murgor shares within two years of signature of the Exploration and Option Agreement.
As a result, in order to acquire a total 55% interest in the Golden Arrow Mine, Murgor must: (i) incur an aggregate of $4 million in exploration expenditures within two years of signing the Exploration and Option Agreement; (ii) pay $500,000 in cash to Victoria Gold Mines, which payment was made at closing; (iii) pay $1.5 million to Victoria Gold Mines in cash or Murgor shares; and (iv) issue 15 million Murgor shares to Victoria Gold Mines, of which 10 million shares were issued at closing.
In order to earn an additional 15% interest in the Golden Arrow Gold Mine, for a total undivided working interest of 70%, Murgor must complete a pre-feasibility study, as such term is defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects. Upon Murgor delivering to Victoria Gold Mines notice of its intention to exercise the option to earn an additional 15% interest, Victoria Gold Mines will have 30 days in which to advise Murgor that Victoria Gold Mines wishes to fund 45% of the costs associated with completing the pre-feasibility study, in which case Murgor's option to earn an additional 15% interest in the Golden Arrow Mine will immediately terminate, unless Victoria defaults in its funding obligation.
In the event that Murgor acquires a 55% interest in the Golden Arrow Mine, Murgor and Victoria Gold Mines will enter into a Joint Venture Agreement. The Joint Venture Agreement provides that Murgor will be the initial operator. If either party's participating interest in the joint venture is diluted to less than 10%, it will relinquish its participating interest and receive in place thereof a 2% net smelter return royalty on production from the Golden Arrow Mine.
The Exploration and Option Agreement also provides that if at any time either Murgor or Victoria Gold Mines wishes to sell, assign or transfer all or any part of its rights and interest in the Agreement and the Golden Arrow Mine, the other will have a pre-emptive right to acquire such interest.
In connection with the closing of the transaction, Murgor issued 200,000 common shares to one individual as a finder's fee.
As a result of the transaction, there are 85,277,090 common shares of Murgor issued and outstanding.
The technical information in this news release has been reviewed by Mr. André C. Tessier, P.Geo, P. Eng, President and Chief Executive Officer of Murgor, a qualified person in accordance with Canadian regulatory requirements as set out in National Instrument 43-101. Mr. Tessier performed a review of the pre-43-101 technical report but has not verified the data disclosed in such report.
Golden Arrow Gold Mine:
The Golden Arrow property consists of 17 mining patents and leases, and two mining claims covering 524 hectares in Hislop Township, located 65 kilometres east of Timmins, Ontario. In 1981 and 1982, a total of 279,593 tons of ore was mined at a grade of 0.061 oz/t (2.09 g/t) from the Arrow open pit. Mining ceased due to low gold prices.
The Golden Arrow Mine property was originally explored underground in the 1940s by the Golden Arrow Mining Company Ltd., which sank a shaft to a depth of 435 ft. (130m) below surface and undertook about 700 m of horizontal development on the 250 ft. (76 m) and 400 ft. (122 m) levels.
The Golden Arrow property is underlain by mafic flows and syenite intrusions with younger post-mineral diabase. Gold is associated with pyrite-quartz veining and hematitic/potassic alteration associated with a quartz vein stockwork within a syenite intrusion and related to a NE-SW structure associated with the Porcupine-Destor Fault Zone. The property covers a two-kilometre strike extension of this NE-SW structure. The Golden Arrow gold deposit is located five kilometres southwest of the past-producing Ross Gold Mine, which produced nearly one million ounces of gold between 1936 and 1989. Also located in Hislop Township are the currently producing Hislop Mine of St. Andrew Goldfields Ltd. and the Black Fox Mine of Brigus Gold Corp.
Source: Murgor Resources Inc.