By purchasing the Grimston World Inc minority interests in the Las Lagunas gold project, EnviroGold (ASX: EVG) is increasing its exposure to the Dominican Republic gold sector.
An EnviroGold subsidiary will pay US$11 million to Grimston in three stages.
EnviroGold has attributed US$6.0 million of the purchase price to 75% of the net present value of Grimston's 6.3% economic interest in the Las Lagunas project, and US$5.0 million to its 30% interest in the project’s Albion process plant on completion of the project, after 6.5 years of operation.
This purchase improves EnviroGold's position in the area, as with 100% plant ownership the company is in a better position to deal with a number of Canadian and local exploration companies active in the Las Lagunas region, in order to establish a mining or tolling joint venture which could provide feed to the Albion plant and extend the life of the project.
Brian Johnson, executive chairman, said that he believed EnviroGold’s process plant would be worth around US$50 million in situ on completion of the project, provided a continuation of feed to add 5 to 7 years to the project life, and around US$25 million if it had to be moved to another site.
Johnson added that he was particularly pleased to end the relationship with the minority partner.
The Las Lagunas region is highly prospective and contains extensive targets for gold in refractory ores, and includes Barrick Gold’s (TSE/NYSE: ABX) 23 million gold ounce Pueblo Viejo property, which is currently being developed at a cost of US$3 billion.