Argonaut Gold (TSX: AR) has struck a deal to sell its Ana Paula gold project in Mexico's Guerrero state just a few months after acquiring the gold property through its merger with Alio Gold, which closed in July.
Under the sales agreement, Argonaut will receive US$30 million upon closing, a further US$10 million upon the start of construction, a 1% net smelter return royalty and 9.9% of the common shares of the acquiring company, which will be formed by a business combination of AP Mining and Pinehurst Capital II Inc. and lead by CEO Bruce Bragagnolo.
Argonaut plans to spend the proceeds on the development of its Magino project in Ontario.
Ana Paula is 180 km from Mexico City and lies with the country's Sierra Madre mountain range.
The project has measured and indicated resources of 21 million tonnes grading 2.17 grams gold per tonne for 1.5 million contained oz. gold. Inferred resources add 870,000 tonnes grading 1.84 grams gold per tonne for 51,000 ounces.
Argonaut Gold's primary assets are its El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Mexico's Durango state, its La Colorada mine in Sonora state, and the Florida Canyon mine in Nevada. In addition to its Magino project, it owns the Cerro del Gallo project in Mexico's Guanajuato state.
News of the deal sent shares of Argonaut Gold up 8 ? to close at $2.82 per share. Over the last year, the company's shares have traded in a range of 76 ? and $3.40. It has about 291 million common shares outstanding for a $819-million market capitalization.