Monday afternoon, Aura Silver Resources (TSX-V:AUU) disclosed inking a binding agreement to acquire 100% interest in the Gold Chain project, giving the Manotick, Ontario-based company 86 BLM lode mining claims in Mohave County in western Arizona.
Aura will have to make payments over the next four years totaling $1.5 million U.S. in cash and 3.75 million shares of AUU stock. Upon all requisite authorizations, Aura will be committed to making an initial payment of $30,000 U.S. and issuing 750,000 shares of common stock to the anonymous seller.
The vendors will also retain a 2% net smelter royalty on future gold and silver production. Aura has the option to buy each percentage point for $1 million (for a total of $2 million for 2%) within one year of achieving commercial production.
Previous exploration indicates the property is prospective for gold, including several epithermal-style gold mineralized exposures across five kilometers. Small-scale mining occurred in the early part of the twentieth century, with additional exploration conducted in the 1980's. Historical records reveal that drilling identified oxidized conditions extending to at least 100 metres below the surface, a condition favorable for gold recovery by leaching.
Aura is looking ahead to a drill program, starting by culling through and organizing the historical data and conducting field studies as the basis for geologic and geochemical models to better understand the potential resource.
Gold Chain will join Aura's portfolio along with the Taviche project in Oaxaca, Mexico (100% owned by Aura) and the Greyhound precious metal project in Canada (JV with Agnico Eagle (TSX:AEM)(NYSE:AEM)).
Shareholders didn't seem really jazzed about the acquisition, as measured by shares of AUU dropping 20.0% to close at two cents on Monday, albeit on just 2,000 shares in volume.
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