Sudbury’s Manitou Gold (TSX-Venture: MTU) said Wednesday morning that it has struck a binding deal with Argo Gold to acquire 16 unpatented mining claims located in Jacobson and Riggs Townships of the Sault Sainte Marie Mining Division east of the town of Dubreuilville, Ontario.
Dubbed the "Rockstar" property, the claims cover 2,816 hectares within the Goudreau-Localsh Deformation Zone, or GLDZ.
The GLDZ, known for quartz veins and gold mineralization, is an area of growing interest for metal explorers underscored by a number of historic mines producing from the zone, including the Edwards Mine and Cline Mines, and recent discoveries.
Miners in the area include Argonaut Gold (TSX: AR) with its Magino gold project and Alamos Gold (TSX: AGI)(NYSE: AGI), who took control of the Island Gold Mine as part of its friendly acquisition of Richmont Mines for $905 million in November.
Manitou Gold was already active in the area as well with its Goudreau property just east of the Edwards and Cline Mines. Adding the Rockstar property, which lies to the southeast of Goudreau, significantly bolsters the company’s footprint in the region, including a large portion of the GLDZ.
To get a 100% interest in the Rockstar property, Manitou Gold has agreed to pay $200,000 in cash and issue a total of four million shares of common stock at a deemed value of 12 cents per share to Argo Gold, for an aggregate cost of $680,000.
Furthermore, Argo will retain a 1% net smelter royalty (NSR) and the project is already subject to a 2% NSR to an unnamed third party. Per the agreement, Manitou Gold has the option to buy one-half of Argo’s NSR for $500,000 and 1% of the third-party’s NSR for $1.0 million.
After closing Tuesday at 12.5 cents, shares of MTU are ahead 4% in Wednesday morning action at 13 cents following the Rockstar news.
