Patagonia Gold Buys Estancia El Rincon Gold Prospect

LONDON (Dow Jones)--Patagonia Gold PLC (PGD.LN) said Tuesday that through its subsidiary Patagonia Gold SA it has purchased the Estancia El Rincon of total area 6700 hectares, containing the Lomada de Leiva Heap leach gold project together with other highly prospective gold areas. MAIN FACTS: -The purchase price for the land was $804,000 of which half was paid at completion with two further instalments of $201,000 due in October 2010 and April 2011. -The agreement includes a sale back to the sellers after mining and or exploration have ceased for a period of two years. -Lomada project, together with the adjacent Breccia Sofia prospect, is located on the La Paloma property block approximately 40km to the south of the town of Perito Moreno and contains a Canadian National Instrument 43-101 compliant resource of 237,000 ounces of gold on which a positive scoping study has been completed. -Low pre-production capital of $8.5 million -Production 21,000 oz. of gold/year, for a mine life of 7 years, at a cash cost of $299/oz. -Project cash flow before tax, of $63.6 million, based on a cash price of $850/oz. gold. -Subject to successful trial heap leaching and permitting, further loading and production from the trial heap leach will continue until the main 5 million ton heap leach project is fully operational, scheduled for 4Q, 2011. -Shares closed Monday at 15.25 pence. -By Tommy Stubbington, Dow Jones Newswires; 44-20-7842-9268; tommy.stubbington@dowjones.com (END) Dow Jones Newswires July 27, 2010 02:43 ET (06:43 GMT)