Patagonia Gold Regulatory News (PGD)

21 Feb 2007 07:02

Patagonia Gold PLC21 February 2007 PATAGONIA GOLD PLC Trading Symbol PGD.L ACQUISITION OF BARRICK'S PROPERTY PORTFOLIO IN SANTA CRUZ, ARGENTINA BARRICK ELECTS TO TAKE PART CONSIDERATION IN NOTES CONVERTIBLE INTO 10% OF PATAGONIA GOLD PLC •The Board of Patagonia Gold Plc ("Patagonia Gold" or "the Company") is pleased to announce that it has acquired Barrick's entire exploration property portfolio in the Santa Cruz province of Southern Argentina ("Acquisition"). •The Barrick property portfolio contains 70 expidentes (mineral titles) in six groups ("Properties") covering approximately 200,000 hectares in the highly prospective Deseado massive region of the Santa Cruz Province in Argentine Patagonia. •To date, drilling carried out on the La Paloma Property, including the very promising Lomada de Leiva discovery, has identified the potential for a gold resource in excess of 500,000 ounces of gold (not compliant to Canadian NI43-101). •Infill Drilling has commenced on the Lomada de Leiva discovery. •Initial consideration for the Acquisition comprises a cash payment of US$800,000 and the issue by the Company of loan notes to Barrick, convertible into shares representing 10% of the enlarged issued share capital of Patagonia Gold. Commenting on the Acquisition, Patagonia Gold's Chairman, Sir John Craven said: "The acquisition of the extensive property portfolio held by Barrick in SantaCruz marks a significant advance for Patagonia Gold. We are delighted thatBarrick, a leading international gold producer, has elected to take part of theconsideration for the sale in the form of convertible notes and we look forwardto developing our relationship with Barrick in the future." Description of the Properties The Properties are a highly prospective portfolio containing 70 expidentes(mineral titles) in six groups covering approximately 200,000 hectares in theDeseado massive region of Santa Cruz Province in Argentine Patagonia. The volcanic plateau of the Deseado massif is 60,000 km2 in area and hostsseveral mines and advanced projects such as Cerro Vanguardia, Mina Martha,Manantial Espejo, Huevos Verdes, Cerro Negro as well as numerous smallerprospects and showings. These projects are low sulphidation epithermal "bonanza"vein style gold-silver deposits, the main target for exploration in this region. Santa Cruz province has an active and established mining industry and contains avery active petroleum industry and accordingly all the infrastructure associatedwith exploration and mining. The closest town to the main project area, PeritoMoreno is serviced by bituminised all weather roads. Lomada de Leiva on the La Paloma Property is the most advanced area drilled bythe Vendors, where a preliminary in house resource by the Vendors has beencalculated. They identified in total the potential for more than 500,000oz gold(not compliant to Canadian N143-101) in three drilled prospects throughout theProperty. Lomada de Leiva. Drill hole intersections include; Hole ID From Interval Au g/t DDH-LP05 49.00 3.44 3.16 DDH-LP05 86.75 3.29 5.34 DDH-LP07 36.00 11.00 5.33 Including 38.60 1.40 15.80 DDH-LP07 49.00 17.00 5.45 DDH-LP11 6.80 3.20 5.30 DDH-LP11 12.00 17.60 9.08 Including 15.00 1.00 24.70 DDH-LP12 78.65 10.00 3.13 DDH-LP14A 105.00 4.00 2.85 DDH-LP20 60.50 4.75 3.90 DDH-LP25 21.00 7.15 2.71 DDH-LP35 88.35 7.35 4.97 Including 89.75 1.40 16.70 DDH-LP36 36.95 12.45 2.59 DDH-LP37 63.80 14.70 5.21 Including 74.00 1.00 13.30 DDH-LP44 44.00 11.00 3.00 Gold mineralization at Lomada de Leiva occurs in a NNE-striking, steeplyESE-dipping tabular zone (500 metres strike x 200 metres normal to strike) withreported gold drill intersections up to 200 metres (vertical) from surface.Geology is characterised by gold mineralized breccias mostly containing angularclasts of rhyolite and occasional clasts of crustiform-colloform banded quartz.The breccias have cut and, perhaps, destroyed earlier quartz veins and arethemselves cut by at least two phases of narrow chalcedonic quartz veins andlate hematite-jarosite veining. A programme of infill drilling at Lomada de Leiva will be carried out to testthe main mineralized zone (500 metres strike length by 200 metres down dip) atmaximum of 50 metres grid line spacing. The above drill programme, has commenced and the drilling contract has beenawarded to an Argentine based company. In addition an access agreement with theestancia owner has been agreed and the Environmental Impact Study (EIS),undertaken by the Vendors, will be transferred to Patagonia Gold. The portfolio of Properties includes a number of other exciting prospects,several with preliminary in-house resources, including the Brecha Sofia zonewhere the following drill intersections were identified: Brechia Sofia zone. Drill hole intersections include; +---------+------+--------+------+ | Hole ID | From |Interval|Au g/t| +---------+------+--------+------+ |DDH-LP42 |272.50| 3.00|140.61| +---------+------+--------+------+ |DDH-LP47 |100.00| 12.00| 2.41| +---------+------+--------+------+ |DDH-LP51 |251.70| 10.00| 4.99| +---------+------+--------+------+ |DDH-LP54 | 0.35| 17.85| 3.50| +---------+------+--------+------+ The Brecha Sofia occurance is characterised by narrow gold-bearing, drusy quartzveinlets and breccia matrix that report up to bonanza gold grades (400 g/t Au).Mineralization here is typical of a low sulphidation epithermal veinlet andstockwork deposit. Brecha Sofia, together with the two other previously drilled prospects,Manchuria and Bagual require further exploration, including geologicalstructural and alteration mapping, as well as systematic geochemical samplingprior to further drilling. In addition there are numerous significant geologicaland geochemical zones that require exploratory drilling. It is intended that the above work will be conducted in parallel to the proposedinfill drilling at Lomada de Leiva. The Patagonia Gold property 'Cerro Vasco' immediately to the north of La Palomahas recently retuned rock chip samples of 2.85m @ 44.2g/t Au in a brecciaconsidered similar to that at La Paloma. An EIS to enable drilling on theproperty has been lodged. The Terms of the Acquisition The Company and its wholly owned Argentinean subsidiary, Patagonia Gold S.A.("PGSA") have acquired the rights, title and interest in 70 mining andexploration claims and properties currently held by Barrick ExploracionesArgentina S.A. and Minera Rodeo S.A. (together "the Vendors") being subsidiariesof Barrick Gold Corporation. The initial consideration for the Properties payable to the Vendors has anaggregate value of approximately £2,572,350 and comprises (i) a cash payment byPGSA of US$800,000 and (ii) the issue by the Company of £2,162,092.65 of loannotes ("Loan Notes") which are convertible into ordinary shares of 1p each inthe capital of the Company ("Ordinary Shares") at a conversion rate of 7.125pper Ordinary Share. Accordingly, upon conversion, the Loan Notes, will convertinto 30,345,160 Ordinary Shares, representing 10 per cent. of the Company'scurrent issued share capital (as would be enlarged by the issue of such shares).To the extent not previously converted or redeemed, the Loan Notes will fall tobe repaid by the Company on 20 February 2009. The Loan Notes will becomeredeemable by the holders thereof after 20 February 2008 and to the extent thatany Loan Notes remain outstanding at such time, interest shall be payable on theoutstanding Loan Notes from the commencement date at the rate of 5.25 per cent.per annum. The Loan Notes may be converted by the Vendors at any time on orafter 27 February 2007 and by the Company at any time after 31 May 2007. A further cash payment of US$1.5 million will become payable to the Vendors uponthe delineation of 200,000 oz or greater of gold or gold equivalent ( 43-101Indicated Resource) on the La Paloma Property group. In addition PGSA hasgranted to the Vendors an option to buy back up to a 70 per cent. interest inany particular Property group upon the delineation of greater than 2 million ozof gold or gold equivalent (43-101 Indicated Resource) on that Property group. Under the terms of the acquisition agreement, PGSA has committed to complete aminimum level of expenditure of US$10 million on the Properties over a 5 yearperiod. This will include a commitment of US$1.5 million in the first 18 months. Marc Sale, (BSC. Geology, member AusIMM, member AIG) a Director and consultantto Patagonia Gold Plc and a qualified person as defined in National Instrument43-101, has reviewed and verified all scientific or technical mining disclosurecontained in this press release. For more information, please contact: Bill Humphries / Richard Prickett Anthony Cardew/Tim RobertsonPatagonia Gold Plc Tel: +44 (0) 20 7930 0777Tel: + 44 (0)20 7409 7444 Fax: +44 (0) 20 7925 0647 Email:tim.robertson@cardewgroup.com www.patagoniagold.com This information is provided by RNS The company news service from the London Stock Exchange