TORONTO (miningweekly.com) – The TSX-V-listed stock of prospect generator Colombian Mines jumped more than 57.14% on Tuesday, after it struck a purchase option accord with a private equity party for the high-grade Pamlico gold project in Mineral County, Nevada, for $4-million.

Colombian Mines said visible gold dominated the high-grade mineralisation that occurred in thoroughly oxidised and brecciated quartz veins. Historic drill holes contained high-grade gold intercepts, the company pointed out.

Three previous operators had drilled 103 holes totalling 8 487 m between 1993 and 2010. The results showed intercepts such as 6.9 m grading 38.49 g/t; 4.6 m grading 239.15 g/t; and 5.3 m grading 36.85 g/t gold.

The Pamlico property is situated about 20 km south-east of Hawthorne, Nevada, and west of Nevada State Highway 95. Situated along the Walker Lane, one of Nevada’s largest and most productive gold trends, the property comprises 116 unpatented lode mining claims covering the historic Pamlico group of underground mines, as well as the surrounding Good Hope, Central, Gold Bar and Sunset mines.

Recent work, completed by the seller between 2010 and 2013, included 29 completed rotary drill holes in the Main zone, a 188-m-long nominal 3 m x 4 m decline, a haul road, initial permitting and all necessary surface and underground infrastructure including shops and office buildings.

The decline, completed in 2013, was advanced to within 7 m of high-grade drill indicated mineralisation. Two previously unknown gold zones were also discovered while driving the decline. Both contained coarse visible gold in brecciated vein material with abundant iron oxides and would be independently sampled as a top priority of the company going forward, Colombian Mines said.

Mineralised material recovered while driving the decline had undergone limited initial gravity testwork by the seller. These results suggest significant recoveries might be readily achieved with conventional gravity methods.

Initial results suggest significant recoveries might be achieved through a low-cost gravity concentration. The drilling to date, simple metallurgy, and access via the new decline, sets the stage for the company's near-term bulk sampling and processing of mineralised material from one or more high-grade zones.

Colombian Mines will focus on evaluating the potential for achieving commercial production from known high-grade mineralisation.

Under the terms of the deal, the company has obtained the sole option to buy a 100% undivided interest in the Pamlico property, by paying the owner $4-million in cash, including advance minimum royalties and production royalties of 4% within four years, or paying $7.5-million in cash, including advance minimum royalties and production royalties as long as yearly payments are equal to or exceed $250 000.

Upon signing, the company paid $50 000, with a second payment of $150 000 due within six months. Payments of $250 000 will be due on each anniversary of the signing date until the full purchase price has been paid.

The 4% net smelter return royalty can be lowered to 1% if Colombian Mines pays the owner $1-million per percentage point.

Colombia Mines’ stock rallied 57.14% to C$0.22 apiece on Tuesday.