Canada’s Prime Mining ( TSX-V:PRYM & OTCMKTS:EPWMF) has inked a 15-year deal for surface use of the Los Reyes gold-silver project area in Sinaloa, Mexico. The deal includes a 15-year right of exploration, with the option to extend for a further 15 years, as well as engineering, construction and commercial operations.
Prime’s shares were up 2% to 0.43p in early Tuesday trading. This builds on a strong start to the year for the company, which has seen its stock rise 60% in just two months.
Los Reyes is located near the city of Cosalá, 45 miles from the west coast of Mexico in the Gulf of California. The project boasts a confirmed 535,000-ounce gold resource and a whopping 9.95 million ounces of silver. Prime hopes to bring Los Reyes into production within 18 months, by adopting an accelerated growth plan.
How it works
Prime completed the acquisition of Los Reyes in August 2019 and went public in September the same year. Since then executives have been meeting with local landowners of the Ejido Tasjera and negotiating terms for access rights.
An “Ejido” is a plot of land originally reserved for farming which the local community jointly owns. Under Mexican law the owners have what is known as “usufruct”, a civil law right entitling them the right to use and derive income from the tranche of land. Most Ejidos are no longer used for agriculture but the local communities have retained ownership and usage rights.
Prime says Los Reyes will work best as a heap leach mine, which comes with lower capital and operating costs than technically-challenging underground digging and hence a more rapid payback on expenditure.
The method involves treating near-surface low-grade gold ore deposits with a solution of sodium cyanide to extract the precious metal. It involves lower water and energy use and brings fewer environmental concerns than traditional mining.
Terms and conditions
The Los Reyes deal has required extensive local negotiations to secure a binding agreement.
The terms include a three-year exploration deal with an upfront fee of $38,300 paid to the Ejido. Prime has the right to extend exploration for two years with a payment of $20,000 in year four and $30,000 in year five.
Prime now has the right to begin mine construction at any time but annual payments will increase to $30,000 per year if this happens before year five.
When commercial production begins the annual payment to the Ejido is hiked to $200,000, with the company paying an additional $15,000 gift to local families. Prime has also agreed to prioritise using qualified local labour.
Historic gold-silver
The Los Reyes project sits within a region that historically has been used for gold and silver mining. Prime say that reserves of 380,000 oz of gold and 6.3Moz of silver are indicated in the region, but that the area has been significantly overlooked by developers.
Modern drilling projects began in the area in the 1990s targeting lower-grade gold-silver mineralisation. Los Reyes was slated for development as a heap leach mine but the scheme fell through when the price of gold dropped 22% in 1997 to end the year at $287.
With gold prices hitting recent highs around $1,700/oz., Prime believes the time is right to re-explore the area.
According to the company, Los Reyes comprises a “large epithermal system with the bulk of work being conducted over less than 40% of the known structures, leaving significant opportunity to expand known resources”.
This could present a significant opportunity for investors.
Prime is jointly listed on the junior market of the Toronto Stock Exchange (TSX-V:PRYM) , which is reserved for early-stage growth companies and on the OTCMKTS, the middle tier of the US over-the-counter venture market (OTCMKTS:EPWMF) .
To read our recent EXCLUSIVE REPORT on Prime, which covers upside offered by the undervalued Los Reyes project in great detail, PLEASE CLICK HERE.
IMPORTANT NOTICE AND DISCLAIMER PAID ADVERTISEMENT.
This communication is a paid advertisement. ValueTheMarkets, Digitonic Ltd, and their owners, managers, employees, and assigns (collectively “the Publisher”) is often paid by one or more of the profiled companies or a third party to disseminate these types of communications. In this case, the Publisher has been compensated by Prime Mining Corp to conduct investor awareness advertising and marketing. Prime Mining Corp paid the Publisher the equivalent of one hundred and seventy-five thousand US dollars to produce and disseminate this and other similar articles and certain banner ads. This compensation should be viewed as a major conflict with our ability to be unbiased. Readers should beware that third parties, profiled companies, and/or their affiliates may liquidate shares of the profiled companies at any time, including at or near the time you receive this communication, which has the potential to hurt share prices. Frequently companies profiled in our articles experience a large increase in volume and share price during the course of investor awareness marketing, which often ends as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in volume and share price may likely occur. This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position. The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser. This communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company’s SEC, SEDAR and/or other government filings. Investing in securities, particularly microcap securities, is speculative and carries a high degree of risk. Past performance does not guarantee future results. This communication is based on information generally available to the public and on an interview conducted with the company’s CEO, and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher cannot guarantee the accuracy or completeness of the information.
FORWARD LOOKING STATEMENTS.
This publication contains forward- looking statements, including statements regarding expected continual growth of the featured companies and/or industry. The Publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the companies’ actual results of operations. Factors that could cause actual results to differ include, but are not limited to, the success of the company’s operations, the size and growth of the market for the companies’ products and services, the companies’ ability to fund its capital requirements in the near term and long term, pricing pressures, etc.
INDEMNIFICATION/RELEASE OF LIABILITY.
By reading this communication, you acknowledge that you have read and understand this disclaimer, and further that to the greatest extent permitted under law, you release the Publisher, its affiliates, assigns and successors from any and all liability, damages, and injury from this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.
TERMS OF USE.
By reading this communication you agree that you have reviewed and fully agree to the Terms of Use found here https://www.valuethemarkets.com/disclaimer/ If you do not agree to the Terms of Use, please contact ValueTheMarkets.com to discontinue receiving future communications.
INTELLECTUAL PROPERTY.
ValueTheMarkets.com is the Publisher’s trademark. All other trademarks used in this communication are the property of their respective trademark holders. The Publisher is not affiliated, connected, or associated with, and is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks.