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Treasury Metals amends acquisition agreement for Pan American's Pico Machay project

Published: 15:42 02 Aug 2011 BST

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Treasury Metals Inc (TSE:TML) announced Tuesday it amended its agreement with Pan American Silver Corp (NASDAQ:PAAS) to acquire 100% of the Pico Machay gold project in Peru.

The change to the agreement extends the closing date of the transaction to August 31, 2011, up from the original closing date at the end of July. 

The amendment also offers Treasury the option to satisfy up to US $10.5 million of the $21 million cash portion of the purchase price through the issuance of a secured promissory note to Pan American.

If Treasury elects this option, the note would be due December 31, 2011, and the company would retain the right to pre-pay into it.

The company would also be required to pay a fixed commitment fee that is equal to the 12% annual interest on the principal amount of the notes, from the date of issuance.

Treasury said it will decide whether to finance the acquisition with the note option based on prevailing equity market conditions.

 "Amending the terms of the Transaction gives the Company greater flexibility to finance in a manner that is in the best interests of the Company's stakeholders," said president and CEO, Martin Walter.

"We are very familiar with the Pico Machay Gold Project and this Transaction will bring shareholders additional exploration upside and near-term production."

The Pico Machay property is a high-sulphidation gold deposit that lies within the northern extent of the Southern Peru Epithermal Gold-Silver Belt.

The 4,823 hectare project is in near-term mine development stage, and  preliminary engineering and metallurgical testwork are expected to support a low-cost, heap leach operation, with low capital investment required. Current measured and indicated resources at Pico are estimated at 270,000 ounces, plus an additional 450,000 inferred ounces.

According to Treasury, it estimates that Pico has the potential to initially produce 50,000 to 75,000 ounces of gold per year. 

Based in Toronto, Ontario, Treasury, is continuing ongoing exploration at its Goliath gold project in Dryden, Ontario.

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