Amarillo Gold Corporation (CVE:AGC) (OTCQB:AGCBF) has amended its property agreement with IAMGold Corporation (NYSE:IAG) while acquiring an additional exploration concession for its Lavras do Sul Project in Brazil.
The company said its total consolidated land position for Lavras do Sul is now 22,278 hectares (ha).
“With a long history of gold mining, Lavras do Sul is highly prospective,” said Amarillo CEO Mike Mutchler in a statement. “With this renegotiated agreement and the recent property acquisition, the company has now simplified and consolidated a sizeable land package of highly prospective ground within the Lavras do Sul gold camp.”
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Amarillo said it terminated its December 2007 non-binding heads of agreement with IAMGold and replaced it with a property purchase agreement that will transfer the title of the properties from IAMGold to Energia Mineral Ltda, an Amarillo affiliate set up with Brazilian partners to meet Brazilian border area requirements.
Covering 5,659 hectares, Amarillo said the new agreement gives Energia 100% ownership of the four mineral concessions and eliminates IAMGold’s 20% ownership. All IAMGold back-in rights have been terminated.
Under the agreement, Amarillo said it will pay IAMGold an aggregate of US$700,000 in progress payments as the properties are developed. The purchase agreement also increases IAMGold’s net smelter royalty from 2% to 3%, 1% of which may be repurchased for US$1 million.
The exploration concession was also acquired through Energia through the National Mining Agency’s exploration auction process. It covers ground that immediately adjoins the current land package.
Amarillo said it has started to explore for new economic gold deposits on the property using soil geochemistry, surface mapping, trenching, airborne and ground geophysics, and diamond drilling.
The Lavras exploration team has identified at least 23 known gold targets and showings through its systematic and phased approach to mineral exploration. Most of the property had never been explored by modern exploration methods due to fragmented land ownership dating back to the late-1880s until 2006.
Amarillo said its overall goal at Lavras is to open a second development front, which will bring it one step closer to realizing its vision of becoming a mid-tier Brazilian gold producer.
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