Nevada Pacific to buy Castle Mountain

Vancouver — Nevada Pacific Gold (NPG-V) has agreed to buy the Castle Mountain mine, 105 km south of Las Vegas, Nev., in California’s San Bernardino Cty.

Currently, Quest Capital (QC-T), formerly Viceroy Resource, owns Viceroy Gold which in turn has a 75% interest in the mine. MK Gold (MKAU-O) owns the remaining 25%.

Under the deal, Nevada Pacific will pay Quest US$2 million and issue 3 million shares. An additional US$2 million will be paid six months after closing, which is expected to occur at the end of February 2004. The Castle Mountain joint-venture reclamation fund has a current balance of US$8 million.

Castle Mountain spans 18 sq. miles and covers 573 claims. The past-producing open-pit heap-leach gold mine produced 1.1 million oz. gold from 36 million tons of ore with an average grade of about 0.04 oz. gold per ton. Operations ceased in May 2001.

“After producing 1.1 million oz., the joint-venture partners closed the mine when gold was US$275 per ounce,” says Nevada Pacific Chairman David Hottman. “Now, with gold over US$400 per ounce, we believe there is exploration potential that could eclipse the mine’s past production. With this purchase and our recently announced acquisition of the Magistral mine in Mexico, we are quickly implementing our business model of generating strong cash flow from gold production underwriting our exploration programs and development of new deposits in Nevada.”

In 2003, the Magistral and the Castle Mountain mines produced collectively 45,000 oz. gold.

Nevada Pacific says an additional 2 million tonnes of ore capacity still remains on the existing leach pad and that this can be expanded within the presently permitted area to accommodate a further 5 million tons of ore.

Three open pits on the property have exploited silicified and stockwork zones containing gold mineralization in a series of faults and fracture zones hosted by Tertiary-aged volcanic rocks.

A technical review by AMEC E&C Services showed that there are still numerous lenses of untested potential gold mineralization between the Jumbo and Oro Belle/Hart Tunnel pits. Nevada Pacific intends to capitalize on this potential.

In addition, widespread, volcanic-hosted, epithermal high-grade gold mineralization occurs at depth in several areas of the property. At the South Domes-621 area, historic drilling intersected 60 ft. averaging 0.438 oz gold per ton in hole DH-954. Hole DH 741 intersected 495 ft. averaging 0.51 oz. gold, including 35 ft. of 4.763 oz. gold.

Nevada Pacific believes that there is potential to develop this style of high-grade gold mineralization, which might be accessible by underground mining methods. A 1,000-ton-per-day mill remains on the site.

Nevada Pacific holds an extensive property portfolio in Nevada spanning about 60 sq. miles of mineral rights in Nevada. The company’s BMX project is optioned to Placer Dome (pdg-t).