Gran Colombia Gold Corp. announced today that it has signed an option agreement with IAMGOLD Corp. for the exploration and potential purchase of an interest in the Company's Zancudo Project.
The Zancudo Project is located in the Titiribí mining district of Antioquia, about 27 km south of Medellin, and comprises a historical gold mine, the Independencia Mine, in the Middle Cauca Gold Belt that had produced about 130,000 ounces of gold with recovered grades of 14.6 g/t Au and 108.4 g/t Ag. The Independencia Mine exploited an epithermal to mesothermal, intermediate sulphidation type vein system that was exploited over 3.5 km with known depths of over 900m. Gran Colombia had completed a 14,000m drilling program at the Zancudo Project in 2011 and 2012 that focused on defining new potential resources by following the strike and shallow dip extensions of the Santa Catalina and Manto Antiguo structures that represent the extension to the south of what was mined in the historical Independencia Mine. Following the gold price collapse in 2013, the Company halted further exploration at the project to focus on the expansion and modernization of its high-grade producing Segovia Operations.
Under the agreement, IAMGOLD has been granted an option to acquire an initial undivided 65% interest (the "First Option") in the Zancudo Project by incurring an aggregate of US$10 million of mineral exploration expenditures over a six-year period, subject to meeting specified annual work commitments during the First Option period, of which the first US$1 million to be incurred within the first year is a firm commitment and IAMGOLD has the right to cease its obligations at any time thereafter.
IAMGOLD has also been granted an additional option (the "Second Option") to acquire a further 5% undivided interest for an aggregate 70% undivided interest in the Zancudo Project by completing a feasibility study within three years after exercising the First Option.
Upon exercise of the First Option or the Second Option, as the case may be, the parties will form a joint venture to hold the Zancudo Project, to advance the exploration and, if feasible, to advance the development and mining of any commercially exploitable ore body.