Premier consolidates 100% interest in Cove-McCoy Properties

Image 1 - Cove-McCoy Property outline (CNW Group/Premier Gold Mines Limited)

Shares Issued:  153,748,463  

THUNDER BAY, ON, Aug. 5, 2014 /CNW/ - PREMIER GOLD MINES LIMITED (TSX:PG) ("Premier", "the Company") is pleased to announce that it has signed a binding Agreement with Newmont Mining Corporation (NYSE:NEM) ("Newmont") to consolidate a 100% interest in the Cove-McCoy Gold Properties located along the Eureka-Battle Mountain Trend in Nevada.  In securing the acquisition, Premier will make staged payments to Newmont over 18 months equal to US$21 Million (plus bonding), of which $15 Million will be paid on signing, and will transfer to Newmont all land sections that comprise its South Carlin Project.  Further details of the transaction are provided below.

The acquisition provides key benefits to Premier including:

  • 100% interest in the consolidated Cove-McCoy property package (now totaling 31,000 acres or 48 square miles) in the heart of one of the world's most productive gold districts.
  • Elimination of "back-in" rights previously held by Newmont as well as a revision of the royalty terms held by Newmont from a "potential" 5.0% royalty (NSR) to a 1.5% NSR.
  • The potential to define near-surface heap leachable mineralization at McCoy that could be prioritized towards development.
  • Existing infrastructure, including lined heap leach pads that could potentially be utilized under a renewed development scenario.
  • A "good faith efforts" processing arrangement with Newmont over a 10-year period within a 12-year window for ores mined at Cove-McCoy.
  • Premier will retain a 1.5% Net Smelter Royalty ("NSR") in the South Carlin property interests.

The Cove-McCoy Gold Mines have produced some 3.3 million ounces of gold and 110.0 million ounces of silver between 1986 and 2006; a 20-year period of historically low gold and silver prices.  While the ores mined at Cove and McCoy occurred in different rock units, the two mines are believed to have a close genetic relationship through their association with the same fault/feeder structures.  These feeder structures have seen only limited previous exploration and represent a priority future exploration target. 

This capex-friendly agreement will enable Premier to explore the Cove and McCoy deposit areas (see Image 1) in an integrative manner while also securing a commitment from Newmont to process ores that might be mined at the property over a 10 year period at predetermined toll rate calculation. Premier believes that a world-class exploration/production opportunity exists at Cove-McCoy (particularly in today's post-$1000 per ounce gold price environment) and will direct its efforts in the near-term on advancing the heap leachable (open pit) opportunity while also evaluating the full extent of primary structures that link the deposits.

"Terms of the agreement support a common sense first step toward building a long-lived gold and silver-producing asset that is very attractive for our shareholders" stated Ewan Downie, President and CEO of Premier, 

"This important acquisition secures for Premier a 100% interest in a substantial and complementary land package located in the heart of one of the world's most prolific gold districts."

The McCoy lands contain significant infrastructure including existing and permitted heap leach pads, buildings, and other infrastructure that could potentially allow for accelerated minesite development. 

Based on historic drilling at the McCoy Mine, Premier believes that excellent potential exists to delineate open pit-style mineralization immediately adjacent to the historic pit.  Additionally, previous drilling below the McCoy underground mine workings indicates the potential for higher-grade gold/silver mineralization at depth that likely does not require dewatering prior to development.

A presentation for the Cove-McCoy Project can be found on the Company's website www.premiergoldmines.com.

The Cove-McCoy Gold Project is located along the Eureka-Battle Mountain Trend that is host to numerous multi-million ounce producing and past-producing mines and is located close to excellent infrastructure (including paved roads & power) and is permitted for an expanded surface drill campaign and underground access.

Premier has recently discovered multiple mineralized horizons below the historic Cove open pit mine.  Step-out drilling is being completed in approximately 100 m increments and has intersected mineralization over an area more than 350 m by 300 m where it remains open in multiple directions. Highlights from the 2201 Zone Discovery drilling include:

  • AX-51: 13.22 grams per tonne gold (g/t Au) or 0.39 ounces per ton (oz/t) and 38.67 g/t Ag (1.13 oz/t) across 10.3 metres (m; 33.8 feet (ft)) and 18.96 g/t Au (0.55 oz/t) and 23.00 g/t Ag (0.67 oz/t) across 4.1 m (13.3 ft).
  • PG14-02: 182.87 g/t Au (5.33 oz/t), 46.90 g/t Ag (1.37 oz/t), 0.10% Pb/Zn across 1.5 m (5.0 ft).
  • PG14-03: 40.23 g/t Au (1.17 oz/t), 203.17 g/t Ag (5.93 oz/t), 1.58% Pb/Zn across 4.9 m (16.2 ft).
  • PG13-02: 15.83 g/t Au (0.46 oz/t) and 38.95 g/t Ag (1.14 oz/t) across 6.1 m (20.0 ft).

OTHER PROJECTS

Premier holds several projects that are subject to ongoing exploration and development programs in 2014.  An updated Mineral Resource Estimate at the Hardrock Project which lies within the Company's 100%-owned Trans-Canada Property has been recently announced which will provide the basis of the preparation of a Feasibility Study, expected H1-2015.  Underground drilling, testing priority target areas is also underway from the haulage drift in Red Lake on the Rahill-Bonanza Project (PG 49% and Red Lake Gold Mines 51%). 

Stephen McGibbon, P. Geo., is the Qualified Person for the information contained in this press release and is a Qualified Person within the meaning of National Instrument 43-101.  Assay results were sent to Inspectorate America Laboratories prep facility located in Elko, Nevada and analysis was performed at their Sparks, Nevada analytical facility utilizing 30 gram fire assay with an AA finish for RC samples and 30 gram fire assay with AA finish and ICP-MS 30 element scan from 4-acid digestion for Core samples. 

Premier Gold Mines Limited is one of North America's leading exploration and development companies with a high-quality pipeline of gold projects focused in proven, safe and accessible mining jurisdictions in Canada and the United States.  The Company is fully financed with a portfolio of advanced-stage assets in world class gold mining districts such as Red Lake and Geraldton in Ontario and the most prolific gold trends in Nevada.

This Press Release contains certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements about strategic plans, including future operations, future work programs, capital expenditures, discovery and production of minerals, price of gold and currency exchange rates, timing of geological reports and corporate and technical objectives.. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risks inherent to the mining industry, adverse economic and market developments and the risks identified in Premier's annual information form under the heading "Risk Factors". There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information.  Accordingly, readers should not place undue reliance on forward-looking information.  All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof.  Premier disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Premier Gold Mines Limited

Image with caption: "Image 1 - Cove-McCoy Property outline (CNW Group/Premier Gold Mines Limited)". Image available at: http://photos.newswire.ca/images/download/20140805_C1318_PHOTO_EN_4614.jpg

For further information: Ewan Downie, President & CEO, Phone: 807-346-1390, Fax: 807-346-1381, e-mail: Info@premiergoldmines.com, Web Site: www.premiergoldmines.com