Jan 24 2011
Constitution Mining Corp. (OTCBB:CMIN) has announced that on January 18, 2011, the Company signed an agreement with Swiss Mining S.A. to start a test-mining production operation on the Company's Gold Sand's project, located in North-East Peru.
Swiss Mining S.A. is currently in the business of developing, and if feasibility is determined, conducting mineral resource alluvial mining operations. As the largest operator in this area of the Amazon basin, they have the knowledge, experience and trained work force necessary to conduct an efficient operation. Swiss Mining will be utilizing a new trommel plant with centrifugal concentrators, in order to optimize the operational footprint, and thus minimize environmental impact on this test production venture.
Constitution Mining's drilling program, which located placer ore bodies, was completed within the MIKA 2 Concession in 2010. A review of the findings made in regard to these alluvial deposits, provides the basis for this Agreement between the two companies. The Agreement designates that Swiss Mining will carry out a test mining operation on the MIKA 2 Concession, located in the Peruvian Province of Datem del Marañon, District of Manseriche. The results will be studied to determine if an expanded agreement between the parties covering a larger area is justified.
Swiss Mining will immediately begin to mobilize its equipment to the site. It expects to begin a six-month Test Mining Operation on CMIN's MIKA 2 Concession within the next four to six weeks. Costs related to this Test Mining Operation, which is expected to involve the processing of approximately 150,000 cubic meters of placer material, are anticipated to be approximately US $425,000.
Revenues, if any, from this test operation will be utilized to cover Swiss Mining's production costs in the following manner: all revenues from the sale or other disposition of ores, concentrates or minerals produced from the mineral properties ("Net Returns") shall be allocated 30% to CMIN and 70% to Swiss Mining, until the agreed upon costs of US $425,000 are fully covered. Any Net Returns beyond this cost recovery shall be divided equally between the two parties, on a 50/50 basis.
The Allocation of Net Returns is based upon a gold price in the range of US $1300 to $1500 per ounce. If the price of gold drops below US $1300 or climbs above $1500 per ounce for at least 5 consecutive business days and Swiss Mining has not recovered its costs of US $425,000, the parties may negotiate an adjustment to the 70/30 split.
CMIN has the right to monitor at its own expense, all activities performed by Swiss Mining or its subcontractors as related to this Agreement. This shall include, but not be limited to, the right to make site inspections at any time; to bring experts and consultants onsite to examine or evaluate work in progress or completed work; to examine the books, ledgers, documents, papers, and records pertinent to this Agreement; and to observe personnel in every phase of their performance of the related work.
Michael Stocker, Constitution Mining's CEO states:
"We anticipate that this test mining operation, in partnership with Swiss Mining SA, will provide valuable information with which to help shape and hopefully confirm our hypotheses regarding the suitability and cost of alluvial gold production operations on our Gold Sands properties. We are very pleased to have reached this important milestone in the evolution of our company as we believe that this is a significant step forward from drilling to actual gold production"
Source: Constitution Mining Corp.