E2 Metals creating a new pure silver play with Argentine acquisition
Pinguino has a foreign resource estimate of 82Moz contained silver equivalent and is described as one of the largest undeveloped silver-gold deposits in Santa Cruz.
Argentine-focused gold-silver explorer E2 Metals (ASX: E2M) is now veering toward becoming a more silver focused company with a cash plus shares purchase of the Pinguino silver project in Santa Cruz, which it describes as one of the largest undeveloped silver deposits in that province.
E2 Metals chairperson Peter Mullens says the acquisition of 100% of the project creates “an emerging pure play silver company on the ASX”.
The deal with Sydney-based, dual listed Austral Gold (ASX: AGD, TSX-V: AGLD) sees E2 Metals acquiring a project that has an established foreign resource of a contained 53 million ounces of silver and 351,000oz of gold in indicated and inferred categories.
In silver equivalent terms, the project hosts 82Moz of contained metal.
Austral will move to holding 19.9% of E2 Metals.
Mr Mullens said the acquisition gives the company a commanding landholding in the Cerro Vanguardia precious metals region of Argentina.
Updated mineral resource will follow completion of deal
Pinguino lies 15km north of E2 Metals’ flagship Conserrat gold-silver project.
Mr Mullens said the agreement with Austral is a transformational move for his company, by consolidating two large silver and gold vein districts in one entity.
“Shortly after closing the transaction, E2 Metals intends to publish an updated mineral resource estimate for Pinguino … and define plans for resource expansion and vein discoveries,” he added.
Cash and shares deal spread over three years
The upfront payment of US$2.5 million will be funded out of E2 Metals’ cash reserves, which stood at A$9.2 million as of September 30.
Apart from that US$2.5 million, Austral will receive as an upfront payment 49.7 million E2 Metals shares, representing 19.9% of the company. Austral will also receive 15 million E2 Metals options.
Over three years, Austral will also be paid a further US$2.5 million in three tranches and will have the right to appoint a director to E2 Metals’ board.
The divestment leaves Austral to concentrate on its core mining operations in Chile and Argentina, as well as interests in Utah and Nevada.
Vein strike over 115km long
Pinguino comprises four mining titles covering 9,986 hectares and lies 35km northwest of the Cerro Vanguardia mine operated by AngloGold Ashanti (ASX: AGG).
Silver and gold were first discovered at Pinguino in the mid-1990s by a subsidiary of Anglo American.
E2 said its new project is host to the second largest vein in Santa Cruz (behind Cerro Vanguardia), where mineralised vein outcrops are up to 13m wide and cover a combined strike of 115km.