Azteca Gold Corp.: Bunker Hill Mine Option Signed
Matthew Russell, President of Azteca Gold Corp. (the “Company”) (TSX VENTURE:AZG) announces that the Company has signed an arms-length option agreement (the “Bunker Option”) in respect to the Bunker Hill Mine property located in Kellogg, Idaho. The mine is currently owned by the New Bunker Hill Mining Company of Kellogg, Idaho. The Bunker Option gives Azteca Gold Corp. the exclusive right to purchase 100% interest in the mine with no residual royalty.
The Company paid US $4,000,000 on signing of the Option Agreement and has agreed to continue to pay $100,000 per month until it either drops or exercises the option. The final exercise price is US $46,000,000, which must be exercised on or before March 20, 2008. Funds from the recently announced deposit receipt financing were used for payment. This signing also triggers the conversion of the deposit receipts into shares and warrants on the basis as previously announced.
The Bunker Hill Mine property comprises 518 patented mining claims covering approximately 6,500 acres. Historic production, as reported in internal reports and records from previous operators, at the Bunker Hill Mine is approximately 35.8 million tons grading average 8.76% lead, 3.67% zinc and 4.52 oz silver. There are no current reserve or resource estimates for the Bunker Hill Mine that are NI 43-101 compliant. The Company has received an independent NI 43-101 compliant technical report dated July 12, 2007 from Edward Brennan of Brisbane, Australia, which will be available on SEDAR.
The Bunker Hill Mine was initially started in the 1880s, and operated more or less continuously until 1981 when new environmental regulations forced the mine to shut down. Since then, it has been on care and maintenance with little exploration or development having been conducted since.
The Company plans to do further evaluation work on the property over the next few months, including a review of existing records and reports, drilling and mapping. Three work programs are planned to be carried out concurrently, although timing and the budget of these may change once the Company gets access to the property. Approximately 50,000 feet of diamond core drilling, at an estimated cost of US $ 3,500,000, is planned to intersect historic ore zones and identify new ore body locations. An extensive underground geochemical rock chip sampling program , at an estimated cost of US $ 2,000,000, will be undertaken to identify and map current ore locations. Finally an assessment of the historical data in respect to drill hole assays and locations, quality control measure and degree of date confidence will also be undertaken, at an estimated cost of US $ 2,500,000. Funding for this work will come from the balance of the deposit receipt financing as well as a small amount of additional funding that will be required to be raised.
In addition, the Company will be in discussions with the US Environmental Protection Agency (”EPA”)to delineate further to the EPA letter disclosed in press release dated June 14, 2007 the obligations that the EPA would expect the Company to fulfill should it acquire the Bunker Hill Mine Property with respect to environmental remediation requirements. Based on the Company’s continued cooperative discussions with the EPA, the EPA remains positive about Azteca’s plans to move forward with this transaction.
The Company is exploring possibilities with potential investors and joint venture partners to assist it in moving the Bunker Hill Mine back into production.
The Company has agreed to pay an arms-length consultant a fee of 5% of the initial US $ 4,000,000 payment and 3% of the purchase price if and when the option is exercised.
The board of directors has approved Jon Slizza to the position of Vice President of Finance and Investor Relations. Jon was granted incentive stock options totaling 1,000,000 at US $.70/share and vesting over 24 months.
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