(Alliance News) - Power Metal Resources PLC said Tuesday it has signed an agreement allowing it a right to earn in a 60% interest in the Alamo project in Arizona, US.
The exploration and development company also said Joe Carrabba, a former board director of Newmont Goldcorp and Murray Nye, chief executive officer of Winston Gold Corp, who on successful completion of project due diligence will join the company on a special advisory committee.
The Alamo project is a package of mining claims covering an area of approximately 340 acres and is situated in west-central Arizona, the company said
The project is currently 100% owned by Frisco Gold Corp. Carrabba and Nye currently hold the option for the 60% earn in. The right includes property payments over a four-year period and exploration costs over a three-year period.
Power Metal will take over the earn in subject to due diligence. This includes nugget verification and geochemical sampling. Power Metal will pay Carrabba and Nye USD25,000 - through the issue of 4.9 million shares - during the due diligence period. The period can be extended, which Power Metal will then be forced to issue a further 2.9 million shares, at the same price.
The shares have ben priced at 0.4 pence. Power Metal Resources shares were up 7.5% in London at 0.43p each on Tuesday afternoon.
If the company is happy with the due diligence, Power Metal will then have to pay Carrabbo and Nye GBP250,000, payable through the issue of 38.8 million shares, at a price of 0.5p.
Power Metal can then earn the 60% stake in the project by spending USD1.1 million on property payments and exploration costs. The company said it would expect to pay a "modest" USD150,000 in the first year.
The project was originally identified as prospective for gold following the discovery of native gold nuggets near surface in numerous locations within the project boundaries.
Power Metal CEO Paul Johnson said: "The Alamo project provides access to a package of claims with notable native gold nugget finds at surface, and a geological backdrop that encourages us to search for the source of the nuggets in the bedrock where, its is postulated, the potential for a large gold system exists."
"The project opportunity appears compelling in itself and will be made more so with Joe Carrabba and Murray Nye working alongside us in an advisory capacity and adding to out confidence," Johnson said.
By Loreta Juodagalvyte; loretajuodagalvyte@alliancenews.com
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Power Metal (POW)