Lone Star Gold, operating out of its base in Albuquerque, is an aggressive precious metals developer which announced a big move today, with the signing of a definitive JV option agreement with Metales HBG Sa. de C.v., whereby LSTG will acquire a 70% WI in the 1,976-acre La Candelaria gold-silver project property located in Chihuahua State, Mexico.
This is a choice location in the prolific Sierra Madre Occidental (SMO) gold and silver belt, offering LSTG a highly accessible and stable channel via the strategic partnership with both Metales and the renown Bustillos-Gonzalez family, which has established quite a reputation in the SMO region stretching all the way back to the 1600’s.
Terms of the agreement call for a cash payment of $240k, 250k shares of LSTG and a work commitment to the tune of some $450k over the initial three years of development (with an NSR of 2%, of which 1% is purchasable for $1M at any time). This agreement goes a very long ways towards satisfying the Company’s short-term mandate to become a mid-tier producer in Mexico.
The La Candelaria site is readily accessible via modern roadways and is proximal to an airstrip in the nearby town of Tonachi, with the main portion of the property roughly 25 miles south of Batopilas.
Extant site analysis from 2009 by Engineering Geologist Luis Olvera and his team produced samples grading as high as 0.35 g/t Au and 89 g/t Ag. The October 2009 report produced by the Olvera team estimated potential reserves at roughly 10.3M oz Au at an average grade of 0.20 g/t, with some 215.7M oz Ag at an average grade of 40 g/t.
Subsequent due diligence efforts undertaken by LSTG over the past several weeks has produced a variety of geochemical, rock-chip, electromagnetic, geophysical and stream sediment data sets, which will be rigorously analyzed in the run up to a planned 10-hole diamond core drilling program set for early fall 2011. The Company is eager to get full spectral analysis back from ALS Chemex in Vancouver and anticipates flurry of activity once the processed sample data is in.
President of LSTG, Daniel Ferris, noted evidence from the report indicating a collapsed caldera with re-insurgence and a secondary caldera structure with substantial mineralization along the major fault line in the property. Ferris explained that extensive documentation on the region indicates only 10-15% of the calderas have been located/defined and thus there is abundant potential that LSTG has picked a perfect location to employ the superior exploration experience of the assembled strategic partnership.
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