JOHANNESBURG (miningweekly.com) – ASX-listed EnviroGold has entered into a formal agreement to acquire a majority shareholding in a small underground gold mining operation in Ecuador.

The company said in a statement on Tuesday that the operation had significant exploration potential over an estimated 450 h mining lease area.

EnviroGold reported that the mining lease would be transferred to a new holdings company, to be established by EnviroGold and the vendor Grumintor SA, which will be issued with shares in the holding company worth $1,5-million, as a consideration for the transfer.

EnviroGold could then progressively subscribe for up to $8,5-million worth of shares in the holding company, over a period no longer than three years, to gain an 85% shareholding in the company.

The company’s review of the prospect during its due diligence, which involved the examination of drill data, assays, and an extensive report by a major international gold mining company, indicated that the property could conceptually contain significant mineralisation.

Although the exploration work previously conducted did not confirm to joint ore reserve committee (JORC) standards, it reinforced the company’s internal targets for the project. EnviroGold consultants have now started a review of existing data and underground workings, together with geological mappings, before nominating an exploration target, drilling programme and budget.

The funds subscribed by EnviroGold in the farm-in agreement would be applied to a drilling programme to establish indicated and inferred JORC resources, in addition to mine planning, environmental and other approvals, a bankable feasibility study, and other development costs.

EnviroGold would also manage the project.

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