Firesteel to option 70% of Cons Magna's Reyna de Oro property
Consolidated Magna Ventures Ltd CMV
Shares issued 21,484,464 Oct 5 close $0.08
Tue 5 Oct 99 News Release
See Firesteel Resources Inc (FTR) News Release
Mr. David DuPre reports
Firesteel Resources has signed an agreement to option the Reyna de Oro
property from Compania Minera La Metalica de Chihuahua (a private Mexican
company) and Consolidated Magna Ventures Ltd. Firesteel can initially earn
a 70-per-cent interest in the property by incurring total staged
exploration expenditures of $3-million (U.S.) and cash or share equivalent
payments of $203,500 (U.S.) over four years. This option agreement is
contingent upon Firesteel's satisfactory completion of a three-month due
diligence review.
Upon fulfilling the required commitments, a joint venture will be formed
with Firesteel holding a 70-per-cent interest and Magna holding a
30-per-cent interest. Metalica retains a 2-per-cent net smelter return
which can be purchased for $2.5-million (U.S.). Any joint venture partner
that does not contribute to continuing work programs will have its interest
diluted on a straight-line basis. If this interest falls to 10 per cent, an
automatic conversion to a 1-per cent nsr will be triggered. The
contributing company has the right to purchase this 1-per-cent nsr for
$1.25-million (U.S.). Thus, the total nsr purchase amount is $3.75-million
(U.S.).
The 1,467 hectare, road accessible property is located in the southwest
portion of Chihuahua state in the heart of the Sierra Madre
gold-silver-copper belt. This district has experienced continuous mining
activity since its discovery in 1632. Numerous mines and significant
undeveloped epithermal gold/silver/copper deposits occur in this area.
The Reyna de Oro property adjoins Francisco Gold's El Sauzal holdings. El
Sauzal hosts one of the largest gold resources in Mexico and has reported a
mineable resource of 23.5 million tonnes at a grade of 2.98 grams per tonne
of gold. An independent review states that numerous geological similarities
exist between the Reyna de Oro prospect and El Sauzal.
The Reyna de Oro property hosts a significant epithermal gold-copper
prospect that was formerly part of the Mexican mineral reserve. Previous
work has delineated the main mineralized zone over a strike length of 400
metres. Recent prospecting has identified gold mineralization up to one
kilometre west and 400 metres east of the main zone. Five previous surface
and underground sampling programs confirm the potential of the mineralized
system. These are highlighted by:
a surface sample from the Vicente zone which gave 57 metres of 4.52
g/t gold and 0.28 per cent copper, as well as a road-cut channel
sample which returned 60 metres of 3.41 g/t gold and 0.18 per cent
copper;
underground channel samples of 3.16 g/t gold over 63 metres, 3.44 g/t
gold over 54 metres and 2.51 g/t gold over 45 metres;
In 1997 a drilling program tested the mineralized zone over a strike
length of 150 metres. Almost all of the holes encountered lengthy
sections of significant gold and copper mineralization. Drill hole RDO
97-01 returned 61.2 metres of 1.44 g/t gold and 0.42 per cent copper.
(This intersection had a core recovery of only 60 per cent.) The upper
29.8 metres of this hole gave 2.89 g/t gold and 0.42 per cent copper
despite only a 36-per-cent core recovery. Channel sampling of an adit
15 metres above this drill hole returned 6.64 g/t gold and 0.21 per
cent copper over 25.8 metres. (The gold values intersected in drill
holes through the mineralized zone under-represent the true grade
because of the poor core recovery. In this case, much of the free gold
is hosted by soft, altered volcanics which are easily washed away
during drilling.)
Firesteel's planned exploration program will be directed toward expanding
the known mineralized zone at depth and along strike. This program will
involve geological mapping, induced polarization, trenching and soil
geochemistry followed by a drill program.
Firesteel's immediate objective is to define a world class gold/copper
deposit. Previous exploration on Reyna de Oro and adjoining neighbor El
Sauzal has shown that this region is capable of hosting this type of very
large deposit.
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