Mining firm Almaden Minerals (TSE: AMM, NYSE: AAU) has struck an option to buy a mill in a US$6.5mln deal, which, it says, will reduce the capital cost of ramping up its Ixtaca deposit in Mexico.
The Rock Creek mill is in Alaska and was built to process 7,000 tonnes per day.
It has been on care and maintenance and is in good condition, and includes a three-stage crushing plant, gravity circuit, ball mill, flotation cells and leaching facilities, the firm said.
Morgan Poliquin, Almaden's chief executive, told investors: "This is a significant transaction for Almaden.
"This mill is very well suited to the flow-sheet we envisage at our Ixtaca project in Mexico, and represents the same throughput as we outlined in our 'ramp-up' scenario in our PEA Update announced in September, 2014.
"Furthermore, we can acquire this infrastructure for substantially less than the cost estimated for brand new equipment in that PEA update.
"For several years we have been dealing with very challenging market conditions for mineral exploration and development as metal prices have fallen along with sentiment."
The deal reduces the initial capital cost estimate of a "ramp-up" scenario for Ixtaca by around US$70 million, to US$174 million from US$244 million, the group added.
Almaden has the exclusive right and option to purchase the mill assets for a total of US$6.5mln, exercisable over three years with staged option payments over two years.
Almaden has also agreed to issue 407,997 common shares.
The PEA in September 2014 sees a "ramp-up" scenario starting with a 7,000 tonnes per day mill and ramps up to 30,000 tonnes per day by year six.
Almaden owns the Tuligtic project in Puebla State, Mexico, which covers the Ixtaca gold/silver deposit.
That currently hosts an NI 43-101 measured and indicated resource of around 93 million tonnes grading 0.55 g/t gold and 32 g/t silver, for a total of 1.65mln ounces of gold and 96.7mln ounces of silver.
Shares in Toronto are unchanged at C$0.78.