VANCOUVER, BRITISH COLUMBIA–(Marketwire – Oct. 29, 2012) – David H. Brett, President and CEO, Pacific Bay Minerals Ltd. (TSX VENTURE:PBM) (the “Company” or “PBM”) reports that the Company has signed a Letter of Intent (the “LOI”) with Salwell Minerals S.A.C. (“Salwell”) to acquire up to an 80% interest the Oro Pataz Gold Project located in the Pataz gold district, approximately 500km north of Lima, Peru (the “Property”). Management believes the Property has the potential to host both underground and bulk tonnage, open-pittable gold deposits.
The Pataz gold district has historic production of over 6 million ounces of gold with several currently operating mines in the region. The Property consists of 10 concessions comprising approximately 3,700 hectares located in the Trujillo Department. Mineralized zones occur as mesothermal gold-bearing quartz veins and stockworks within a propylitically altered and highly pyritized granodioritic host rock.
Exploration on the land package over the last 10 years has been limited in part due to fragmented land ownership which Salwell successfully consolidated in 2008. However, prior to 2002 a significant amount of exploration work was carried out, including: ground geophysics, remote sensing, trenching and a 10-hole drilling program. Much of the historic data, including the drilling, cannot be directly confirmed and is available in brief report.
However, two areas of surface gold mineralization separated by about 2 km were verified more recently by Salwell. The El Tornito Zone, discovered in 2006 by Salwell’s geolgists, is 1,500m x 500m and has 19 rock chip samples that range from 0.16-1.75 ppm (averaging about 0.75 ppm). The Valentina Zone discovered in the late 1990s has been sampled over an area 500m x 500m with 10 rock chip assays that range from 0.11 to 1.48 ppm (averaging 0.71 ppm). Salwell’s geologists have re-sampled some of these test pits and verified the presence of gold mineralization at these levels.
This Valentina Zone was also the subject of the drill testing which has not yet been verified, but which apparently encountered significant gold values under the surface mineralization. Reported intercepts include 10.3 grams per tonne gold over 15.2 metres, 8.78 gpt gold over 9.7 metres and 10.5 gpt gold over 12.8 metres. The intercepts are reported as core length only; true widths unknown. The average down-hole depth of the structural zone is approximately 80 m. A full table of the drilling results follows.
Broad zones of low grade mineralization at surface, combined with better reported grades at depth, bolsters management’s view that the Property has open pit and high grade underground potential.
*The above drill results are consistent with other gold deposits in the region and believed by the Company to be reliable, but were obtained by previous operators whose pre-NI 43-101 quality control and quality assurance procedures cannot be verified by the Company. As such, these results need to be confirmed and should not be relied upon by investors.
The LOI is subject to the approval of the TSX Venture Exchange and the completion by the parties of a definitive option and joint venture agreement. The terms of the LOI to earn a 60% interest in the Property include:
- Pay Salwell $10,000 (all figures in USD$) within 10 days of signing the LOI.
- Pay Salwell $5,000 and 50,000 shares of PBM stock per month, or $10,000 per month, at PBM’s election, for 10 years.
- Incur a minimum of $250,000 in exploration expenditures of the Property per year for 10 years, or an aggregate of $2.5 million over a shorter period, at PBM’s election.
To earn an additional 10% interest in the Property, PBM must:
- Pay Salwell 1 million shares of PBM
- Continue the minimum $250,000 per year in expenditures.
- Fund and complete a feasibility study recommending commercial production on the Property.
To earn a further 10% interest in the Property PBM must finance and place the Property into commercial production.
“The acquisition of this high quality gold project represents a shift in direction for Pacific Bay,” said Pacific Bay CEO David H. Brett. “While we maintain our excellent portfolio of uranium and base metal holdings, we look forward to making Oro Pataz our flagship project over the near term.”
The technical disclosures in this news release were reviewed and approved by Doug Blanchflower, P.Geo., a Qualified Person, as defined by National Instrument 43-101.
Pacific Bay Minerals Ltd.
David H. Brett, MBA, President & CEO
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.