Affinity Gold Corp. Signs Formal Joint Venture Agreement to Develop Currently Producing Silver & Lead Asset in Peru
MAPLE GROVE, MN--(Marketwired - Dec 16, 2013) - Affinity Gold Corp. (OTC Pink: AFYG) ("Affinity" or "the Company") is pleased to announce it has entered into the Formal Joint Venture Agreement with Corizona Mining Partners, LLC ("Corizona") to jointly develop the Cambalache project, a producing silver (Ag) and lead (Pb) mine located in District of Lircay, Province of Angaraes, Department of Huancavelica to the southeast of Lima, Peru.
President & CEO, Mr. Corey Sandberg, recently returned from a due diligence trip to Peru during which he made a site visit to the Cambalache project. Upon review of the due diligence, further conversation with Corizona management in Peru and the current project owner, the partners agreed to make modifications to the original terms of the Letter of Intent to more appropriately align with the needs and potential of the project.
Affinity, Corizona and the current project owner of the Cambalache project (together the "project partners"), have agreed to establish a new legal entity under which the project, and all operational assets, will be transferred to and held free and clear without encumbrances. This entity is in the process of being finalized and assets transferred. Originally, the agreement between Corizona and project owner stipulated an earn-in of the existing entity where project is held.
Affinity and Corizona ("joint venture partners") have established a new legal entity called "Compania Minera RyCor, S.A.C." ("Rycor") in which Affinity holds an immediate and undivided 49.9% interest. Furthermore, RyCor will still have an option to purchase up to an additional 25% of the Cambalache project for up to three million dollars (USD $3,000,000) with an expiration of five years.
RyCor will be immediately granted a 50% ownership interest in the new legal entity where the project and operational assets are to be transferred and held. In addition, RyCor will elect the General Manager of this new legal entity.
In the Formal Agreement, Affinity commits to the following obligations in exchange for an immediate and undivided forty-nine percent (49.9%) interest in RyCor:
- a total capital investment of USD $25,000 upon the following being completed:
- Finalization of bank accounts for Compania Minera RyCor, S.A.C., ("RyCor"),
- Finalization of new legal entity where Cambalache assets are to be transferred, held and owned,
- Transfer of assets to new legal entity owned by the project partners.
- $60,000 30 days from the execution of Formal Agreement and completion of assets and ownership interest legally transferred and recorded.
- $85,000 within 60 days from the completion of assets and ownership interest legally transferred and recorded.
- $85,000 within 90 days from the completion of assets and ownership interest legally transferred and recorded.
- $545,000 over the course of 12 months following the execution of the Formal Agreement and completion of assets and ownership interest legally transferred and recorded.
- Affinity will be granted an expedited payback of 70% of the income RyCor receives until its fully invested capital is recovered. Upon Affinity recovering its full investment, distributions will revert to 49.9%.
Under the Joint Venture agreement with Corizona, Affinity will be responsible for a total capital investment of USD $770,000 while Corizona subsequently responsible for USD $330,000, in order for the Joint Venture partners to earn an undivided fifty percent (50%) equity interest in the Cambalache project.
About Project Cambalache:
The project is a silver (Ag) and lead (Pb) producing, low sulphidation polymetalic lode deposit, located in District of Lircay, Province of Angaraes, Department of Huancavelica to the southeast of Lima, Peru. The project is located at an elevation of 3,466 - 4,790 m.a.s.l. approximately 519 Km from Lima, capital of Peru, via the South-PanAmerican Highway.
- Currently producing at a rate of 12 TPD with current processing capacity of up to 60 TPD. Current production rate of 12 TPD produces approximately 1 ton of concentrate with a head grade of 8%.
- Project was previously producing until being shut down in early 1990s and only recently re-opened in late 2011. Located in a great silver mining area and just 12 km from Buenaventura's famous Julcani Mine.
- Reported Grades from Assays - (Report: February, 2013)
- 11% Pb/T, 15 oz./T Ag (466 g/T Ag)
- Varying levels of Zn and Cu as potential products
- Reported high grade Ag ore shoot was developed at depth. It has been reported that on portal at 3,455 m.a.s.l., a high grade ore shoot, of direct shipping ore, was encountered. Some of the waste dumps found at the caved 3,455 m.a.s.l. portal have shown to be mineralized and are being economically exploited today.
- The 3,515 m.a.s.l crosscut has intercepted two of the three known veins that comprise the Veta Dos vein structure. Fresh cuts across the veins, showing they are there.
- Three identified low sulfidation veins with demonstrated 0.5 m - 10 m widths, 500 m lengths, and 250 m heights.
- Project is easily accessible via Pan-American and Libertadores highways.
- Project has mining, environmental, social, and plant permits.
"I am quite pleased with the structure of the overall transaction allowing the joint venture partners to immediately participate in a producing mine as it begins making investments and developing the project. We are steadfast in making sure the agreements and entities are in good order before we begin making our investments towards increasing production to 100 TPD by Q3 of 2014," stated President & CEO, Corey Sandberg.
About Corizona Mining Partners, LLC
Corizona Mining Partners was founded in 2011 as a junior mining company focused on the acquisition and immediate production of hard-rock and alluvial mining concessions in the Americas. Corizona's strategy is built around locating projects that can go into production and generate revenue quickly. Corizona was co-founded by Mr. Corey Sandberg who currently retains a 24.5% interest in the company but has not served in an executive management capacity since May, 2013.
About Affinity Gold Corp.:
Affinity Gold Corp. is a mineral exploration and development company engaged in the acquisition and development of near-term precious mineral production properties within Peru. Affinity Gold Corp.'s primary focus is on developing assets that have demonstrated historical production, contain documented and reliable data and can reasonably begin producing within 12-18 months at a cost of less than $900 per gold equivalent ounce.
For further information please refer to the Company's filings with the SEC on EDGAR available at www.sec.gov
FORWARD-LOOKING STATEMENTS
This news release may include "forward-looking statements" regarding Affinity Gold Corp., and its subsidiaries, business and project plans. Such forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the United States Securities and Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor created by such sections. Where Affinity Gold Corp. expresses or implies an expectation or belief as to future events or results, such expectation or belief is believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Affinity Gold Corp. does not undertake any obligation to update any forward-looking statement, except as required under applicable law.