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Monday, 4 February 2013
Cayden Resources gets over $15 mln for exploration from partial sale of Morelos Sur to Goldcorp unit
Cayden Resources (CVE:CYD) has been handed significant cash to further advance its Mexican properties as it says it will sell two blocks of the eastern portion of its Morelos Sur concession for US$15.74 million to a Goldcorp (TSE:G) subsidiary - Desarrollos Mineros San Luis - which owns the adjacent Los Filos mine.
The sale represents a total of 2,492 hectares of Cayden's 17,076 hectare concession. Aside from the US$15.74 million cash consideration, Cayden will also get a royalty.
Shares of the junior mineral explorer shot up more than 8.5% after the news this morning, to $1.65. Its stock is up more than 63% in the last six months.
"We are very pleased to have reached mutually acceptable terms with Goldcorp in this partial concession sale and look forward to maintaining an excellent relationship with them moving forward," said Cayden president and CEO Ivan Bebek, in a statement Friday.
"The funds received from this transaction will be used to continue to advance exploration programs at both of our Mexican gold properties, Morelos Sur and El Barqueno."
Bebek said further that the remainder of the Morelos Sur concession hosts the La Magnetita and Las Calles areas, which he says continue to be the project's "high value exploration targets".
Indeed, the non-dilutive transaction gives Cayden funds for property expenses, exploration and general administrative costs, with plans for at least 20,000 metres of drilling on its Mexican properties.
Without any near-term needs to finance, the deal will give Cayden a net treasury close to $17 million.
The company could also potentially benefit big from its Las Calles concession at Morelos Sur, which has been "partially drilled, intersected significant mineralization and fortuitously lies between two major operating gold mines", Cayden tellsProactiveinvestors.
Goldcorp's Los Filos mine is Mexico's largest gold producer - generating 336,000 ounces in 2011. La Magnetita, one of the targets that Cayden still holds, is the largest unexpolored geophysical anomaly of its type in the gold belt and it is thought to mirror the geophysics of Goldcorp's Los Filos deposit.
Fifty per cent of the cash due under today's deal with Goldcorp will be paid around February 28, with the balance to be paid once the subdivided titles of the Morelos East concession are registered in the name of the Goldcorp subsidiary.
The portion of land will be subject to a reserved royalty in favour of Cayden's Mexican subsidiary, plus the existing government royalty of 2.5%.
The reserved sliding-scale royalty will start after the first 250,000 ounces, Cayden said, starting at 0.75% and up to 1.75% when gold is over $2,500 an ounce.
The news today follows Cayden's announcement on Thursday that it has acquired an option to buy out the royalties on its Morelos Sur gold project, as part of the planned sub-division of the concessions into three separate areas - a pre-cursor to the deal unveiled today.
The property had underlying royalties due to Industrial Minera Mexico - a unit of Grupo Mexico, the largest mining corporation in the country.
Cayden has now settled an agreement that divides the royalties on three separate concessions, and has an option to buy out these underlying claims, or has already bought them outright.
Under the terms of the amended agreement, the Morelos East concession, which is comprised of an east block and a west block that surround Goldcorp's Los Filos and El Bermejal mines, will still be subject to the 2.5% royalty payable to the Mexican Geologic Service. The 1% payable to Industrial Minera was purchased for $10,000, the company said.
The Morelos Sur project is located in the Guerrero Gold Belt, which is an emerging gold region in the southern State of Guerrero, Mexico, that extends roughly 60 km.
Industrial Alliance Securities recently initiated coverage on Cayden Resources, rating the junior explorer a speculative buy, on the basis of "highly prospective drilling and a pending land sale", the latter of which was announced Friday.
The analyst, Merrill McHenry, cited location as the number one reason for its recommendation, as Cayden "not only surroundsGoldcorp's Los Filos mines, but is between them as well."
In addition, the Industrial Alliance report highlighted the company's El Barqueño property in Jalisco, Mexico - which could be a "company maker" as well, with drilling expected in the second quarter of this year.