Vancouver-based Calico Resources Corp. (TSX-V: CKB), formerly Cobre Exploration Corp., announced today that it has entered into a non-binding, exclusive letter of intent with Seabridge Gold Inc. granting Calico an option to acquire a 100% interest in the Grassy Mountain Project from Seabridge.
The Grassy Mountain Project, located in Oregon, has an estimated potential for 90,000 ounces of annual gold production at a cash cost of $175 per ounce.
The agreement stipulates that Calico will issue 2,000,000 shares after the execution of a definitive agreement and TSX-Venture approval, 4,000,000 shares on the first anniversary of the execution of the option agreement and 8,000,000 shares when the project receives permits and bonding for the construction and operation of a mine.
In addition, after the delivery of a feasibility study on the project, Calico must either grant Seabridge a 10% net profits interest or pay Seabridge $10 million in cash.
Bill Wagener, president and CEO of Calico, said, “The acquisition of the Grassy Mountain Project fits our strategy of acquiring a project with near-term production potential in excess of 50,000 ounces per year, which also contains a significant exploration upside.”
Added Seabridge president and CEO Rudi Fronk, “Seabridge is enthusiastic about Calico’s acquisition of the project and believes that Calico’s management team has the skill set, commitment and knowledge to grow the resource through exploration and progress the existing resource to production.”