Echo Bay arranges to buy into Minoro project

Upon completing a 60-day due diligence review of the Minoro gold-copper project in Honduras, Echo Bay Mines (TSE) can elect to earn a 51% interest.

Tombstone Explorations (TSE) and Mar-West Resources (VSE) signed a joint-venture agreement, splitting the project on a 80-20 basis, respectively. Tombstone cut Mar-West into the property with a 20% working interest in return for bringing the company the original deal.

Tombstone’s acquisition of the property is subject to a further payment of US$800,000, to be made in stages over an 18-month period.

The partners plan to spend more than $1 million in the current program, including drilling of four separate targets, which is under way on the Montecielo zone. Geophysics and trenching are also planned on areas where copper-gold mineralization occurs on surface.

Echo Bay can buy into the project by investing $6 million initially in Tombstone by way of staged share purchases. Of this amount, $4.5 million must be spent on Minoro.

Echo Bay is further responsible for advancing the project to the bankable feasibility stage, at which point it must pay Tombstone a final payment, the lesser amount derived from using one of two formulas: 51% of the minable, proven and probable ounces using a value of US$20 per oz.; or the market value of 3.9 million shares acquired by Echo Bay, less the initial investment of $6 million. (The minimum payment by this second method can not be less than US$12.5 million.)

Tombstone is required to pay Mar-West 20% of the funds received upon receipt of a bankable feasibility. Also, in conjunction with the Echo Bay deal, Tombstone has formed an agreement with Mar-West to acquire an additional 10.2% interest in the Minoro property in return for investing $1.2 million in Mar-West by way of private placement.

Subject to all parties vending their respective interests, the Minoro project will be held 51% by Echo Bay, 39.2% by Tombstone and 9.8% by Mar-West.