GoGold signs definitive deal to buy Santa Gertrudis

Dec 5, 2013

GOGOLD SIGNS DEFINITIVE AGREEMENT TO BUY THE SANTA GERTRUDIS OPEN-PIT GOLD MINE IN MEXICO

GoGold Resources Inc. has signed a definitive agreement with Animas Resources Ltd. to buy the past-producing Santa Gertrudis gold mine located in Sonora, Mexico. GoGold will acquire 100 per cent of the Animas Mexican subsidiaries, which hold the titles to the Santa Gertrudis gold mine. GoGold has completed its due diligence. The definitive agreement is subject to all necessary regulatory approvals.

GoGold’s previously announced letter of intent for the Santa Gertrudis gold mine contained right-to-match provisions for the benefit of GoGold. Animas received a competing offer for the Santa Gertrudis gold mine. GoGold made a revised offer to Animas, which Animas accepted. The purchase price for the Santa Gertrudis gold mine is payable as follows: $250,000 deposit payable upon signing of the definitive agreement; $4.75-million payable on closing; a 3-per-cent net smelter returns royalty for gold and silver; and a 2-per-cent net smelter royalty for all other metals on the Santa Gertrudis gold project. The NSR will be calculated and paid before any tax, value-added tax or withholding tax. GoGold will also have the right to purchase one-third of the NSR at any time for $5-million and starting Jan. 1, 2017, a minimum advance royalty of $250,000 annually for a period of four years in the event the mine is not in production. These advance royalty payments will be credited against any payments of the NSR.

The project

The Santa Gertrudis gold mine, located 180 kilometres north of Hermosillo, Sonora, Mexico, was discovered by Phelps Dodge in 1986 and advanced to open-pit heap-leach production in 1991. From May, 1991, to October, 2000, the Santa Gertrudis gold mine produced 564,000 ounces of gold at an average grade of 2.13 grams per tonne. Phelps Dodge sold part of the Santa Gertrudis gold mine to Campbell Resources in 1994 for $10-million (U.S.). Campbell Resources later ceased mining and processing activity due to low gold prices during the late 1990s and settled some outstanding debts by assigning several core area concessions, including the unmined Cristina deposit, to certain local Mexican contractors. The Amelia mine, also located within Animas’s claims, was estimated to have historically produced over one million tonnes at 2.88 grams per tonne gold. Over the past several years, all of these claims have been reassembled by Animas and are being purchased by GoGold. A current NI 43-101 resource exists in and around the open pits at the Santa Gertrudis gold mine, a portion of which at the time of production was in the mine plan for extraction. Currently, the resources are classified as inferred under the NI 43-101 regulations and consist of 557,000 ounces of gold in 13.5 million tonnes at a grade of 1.28 grams per tonne (technical report and resource estimate on the Santa Gertrudis gold project, Sonora, Mexico, prepared for Animas Resources Ltd. dated Dec. 31, 2010, by Alan Noble, ore reserves engineer and professional engineer).

The technical team is currently evaluating a large database located at the mine site of 2,422 drill holes (250,539 metres of both core and reserve circulation drilling), along with more than 100,000 metres of blast holes to upgrade the current resource to measured and indicated to advance the project toward final feasibility and production. The team believes it can achieve final feasibility by mid-2014. The initial goal is to generate a mine plan to extract the remaining gold around past-mining operations, and GoGold will ultimately seek to bring more of the project into production over time.

Terry Coughlan, president and chief executive officer, stated: “We are pleased to have the opportunity to put the Santa Gertrudis gold mine back into production. We are currently constructing our Parral tailings mine in Chihuahua and plan to start production there in May, 2014. The Santa Gertrudis mine fits GoGold’s vision to add projects with potentially low start-up costs and a fast track to production. With our teams’ past track record of successfully building and operating mines in Mexico, we believe that we can bring this past-producing mine back into operation quickly adding significant value for our shareholders.”

Qualified person

Mr. Coughlan, PGeo, president and chief executive officer of GoGold, is a qualified person as defined by National Instrument 43-101 (standards of disclosure for mineral projects) and has reviewed the scientific and technical information in this release.

http://www.gogoldresources.com/index.php/investors/press-releases/2013