Millrock Resources Inc. announces it has entered an option agreement to purchase the El Picacho project. The project consists of district-scale concessions that cover approximately 6,300 hectares, located in Sonora State, Mexico, 18 kilometres southwest of the San Francisco Gold Mine which is operated by Alio Gold Inc.
The target is an orogenic gold deposit of similar scope to that present at San Francisco. The project was identified to Centerra Gold Inc. (“Centerra”) by Millrock, and Centerra has agreed that El Picacho will become a “designated project” under the terms of the strategic alliance agreement (“Alliance”) in place between the companies. The Alliance was announced here in early 2017. Centerra has provisionally approved a US$460,000 exploration budget for 2017 for the El Picacho project.
LISTEN: Greg Beischer Discusses The El Picacho Acquisition and What It Means For Millrock Shareholders
Gregory A. Beischer, President & CEO commented: “One of the senior members of Millrock’s Mexico exploration team is highly familiar with the San Francisco Gold Mine. In comparison to San Francisco, he reports many similarities in the rocks and structures exposed on the El Picacho project. This is the first designated project to come out of our Alliance with Centerra and we look forward to working on this project with them”.
At El Picacho Jurassic rocks are juxtaposed in a thrust fault relationship with much older Precambrian age rocks. Structural relationships, alteration, and mineralization discovered to date all indicate favorable conditions for the formation of an orogenic gold deposit similar in geologic style to the prolific gold mines of the La Herradura district to the northwest, or to the nearby San Francisco Gold Mine.
Millrock has an option to purchase a 100% interest in the mineral estate. To complete the purchase US$1,723,500 in option payments are due over a four-year period. An initial payment of US$21,375 has been made. Seven equal option payments of US$21,375 will be due at six-month intervals. A final option payment of US$1,552,000 would be made to complete the purchase of the mineral rights. Millrock, with Centerra concurrence, may withdraw from the option agreement at any time.
Centerra Gold has the option to earn an 80% interest in El Picacho by making exploration and other expenditures of US$2.0 million. Millrock’s team will execute the exploration work and be entitled to a modest management fee. At vesting, a joint venture will be formed, Millrock may participate by contributing its pro-rata share of costs, or it can elect to dilute to a 1.0% Net Smelter Return royalty.
The underlying surface owner will be paid US$10,000 annually for the first four years of exploration. Millrock may extend the option for two additional years for US$20,000 per year and may purchase a surface tract at the price of US$1,000 per hectare.
The technical information within this document has been reviewed and approved by Gregory A. Beischer, President, CEO and a director of Millrock Resources. Mr. Beischer is a Qualified Person as defined in NI 43-101.