Tocvan Ventures Corp. (CSE:TOC) said it has entered into a binding Letter of Intent (LOI) to acquire additional land immediately adjacent and north of its Pilar gold-silver project in Mexico’s Sonora state.
Tocvan CEO Brodie Sutherland said the acquisition of the 2,172.7 hectares from a private title holder is “a company-changing event that provides us access to what we believe is a highly prospective area adding significantly to the development potential of Pilar”.
“Applying the knowledge we have gained from evaluating Pilar over the last few years gives us a huge advantage in quickly defining new areas of mineralization that can not only expand Pilar but also identify the potential for a new gold-silver district in Sonora,” Sutherland said in a statement.
“The addition also provides us ample space for future mine development infrastructure that will greatly reduce future capital expenditures.”
Under the terms of the LOI, Tocvan will make total cash payments of US$4 million and issue 2.5 million common shares over the five-year term of the agreement. Additionally, it will make a total minimum work commitment of US$1 million. The title owner will retain a 2% net smelter royalty (NSR) on the acquired properties.
After the initial five-year term, Tocvan said it can elect to extend the agreement for an additional 10 years by starting advanced royalty payments or purchase full title ownership through an additional cash payment of US$500,000. On closing of a definitive agreement, it will make an initial payment of US$250,000.
“We feel this acquisition will make Pilar stand out as an emerging exploration district and recent placer mining in the area suggests there is much more to be discovered,” Sutherland added.
“The consolidation of the district will no doubt draw even more attention from the major producers of the region as we continue to advance Pilar toward production.”
The Pilar gold-silver property has recently returned some of the region’s best drill results. Coupled with encouraging gold and silver recovery results from metallurgical test work, Pilar is primed to be a potential near-term producer.
Tocvan was created to take advantage of the prolonged downturn in the junior mining exploration sector, by identifying and negotiating interest in opportunities where management feels they can build upon previous success.
Contact the author at stephen.gunnion@proactiveinvestors.com