Calgary, Alberta (FSCwire) – Morro Bay Resources Ltd. (“Morro Bay” or the “Company”) (TSX-V: MRB) announces that the terms for the option on the Peñoles Project between Morro Bay and Riverside Resources Ltd. ("Riverside") have been amended and the option exercise date extended to March 31, 2015.
John Zang, CEO of Morro Bay stated "recent drilling at Peñoles has encountered wide intervals of near surface gold and silver mineralization which may be amenable to low cost, open pit mining. The amended option agreement with Riverside is a successful start to what promises to be an important year for the progression of the project. As we welcome the opportunity to advance Peñoles further, the amendments to the option agreement allow Morro Bay to ensure its funds are spent in proving up the project’s potential.”
The Amended Peñoles Option Agreement
The most significant change to the Option Agreement is the removal of the requirement for Morro Bay to pay the cash payment of approximately $1.35 million to Riverside in order for the Company to earn a 51% interest in the Peñoles Project (the “Initial Option”). In addition, the Option exercise date has been extended to March 31, 2015.
Subject to fulfilling the conditions referred to below, Morro Bay has the option to acquire a 51 percent (and up to 65 percent, as set out below) in the Peñoles Project. The Option exercise date is not later than March 31, 2015. The conditions for the exercise of the option are as follows:
- Morro Bay shall make a payment of $750,000 to Riverside by March 31, 2015 (payable in cash or Morro Bay shares at Morro Bay’s election provided that if the value of Morro Bay shares is less than $0.05 such payment must be made in cash);
- Morro Bay shall incur Joint Venture Expenditures of $750,000 for each of the first three years (any amounts expended over $750,000 will be credited toward the following years expenditure requirements);
- Riverside shall have a credit of CA$100,000 and US$1,250,000 against the first Joint Venture Expenditures incurred by the Joint Venture; and
- Should the Joint Venture fail to incur Joint Venture Expenditures of at least $750,000 in each of the first three years, Riverside will have to right to acquire 100% of Morro Bay’s Interest by returning to Morro Bay 80% of the common shares issued by Morro Bay to Riverside.
The Amended Peñoles Option Agreement further provides that in order for Morro Bay to earn an additional 14% interest in the Peñoles Project (bringing the Morro Bay interest in the Peñoles Project to 65%) (the “Additional Option”), Moro Bay must:
- Make a cash payment of $30,000 on or before the first anniversary date of the exercise of the initial option;
- Incur additional expenditures at the Peñoles Project of not less than $5 million, half of which are to be incurred within 12 months from the date of the exercise of the Initial Option (i.e. 51%) and half of which shall be incurred within 24 months from the date of the exercise of the Initial Option; and
- In the event the Morro Bay shares are trading over $0.05 deliver to Riverside $750,000 in cash or shares at Moro Bay’s election, or if the Morro Bay shares have a market value of less than $0.05 pay to Riverside the sum of $750,000 in cash.
Peñoles Project
Peñoles is a historic silver mining district in the Durango Silver Belt that has had relatively little modern exploration. Published historical accounts indicate that Compania Minera Industrias Peñoles operated several vein-type, underground silver mines at Peñoles from 1887 to 1908, however production records are limited and potential extensions of the mines were never systematically explored.
The Peñoles Project consists of approximately 23,000 hectares of Riverside owned concessions that cover two of the historic underground silver mines (referred to as Jesus Maria and San Rafael), an oxide gold prospect (referred to as El Capitan) and numerous exploration targets.
Approximately 86 diamond drill holes totaling more than 11,550 metres have now been completed. Initial drill programs focused on the El Capitan prospect (50 drill holes) and have traced mineralization over a strike length of more than 700 meters. The mineralized zone ranges from 50 to 165 meters in width and has been traced down dip for approximately 200 meters.
During 2013 and 2014 drilling continued beyond El Capitan with 30 holes and approximately 3,115 metres of drilling completed in the Jesus Maria mine area. The mineralization exploited by the historic mine workings has been traced for more than 1,000 meters along strike and several previously unrecognized, near surface mineralized zones have been identified. Further drilling could expand these zones significantly and recent drilling has now extended exploration to include the historic mine workings at San Rafael.
Qualified Person and Quality Control/Quality Assurance
The scientific and technical data contained in this news release pertaining to the Peñoles Project was prepared under the supervision of Carl von Einsiedel, PGeo. who is responsible for ensuring that the geologic information provided in this news release is accurate Mr. von Einsiedel is the exploration manager for Morro Bay and acts as a “non-independent qualified person” as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects.
About Morro Bay
Morro Bay is a junior mineral exploration company based in Calgary, Alberta, Canada, focused on the exploration for precious metals in Mexico. Morro Bay's business strategy is to build shareholder value by rapidly advancing the Peñoles Project in Mexico through the resource delineation stage.
Further Information
For further information please contact:
Morro Bay Resources Ltd.
John C. Zang
President and Chief Executive Officer
403 680 9264
Patrick Piette
Investor Relations
416 526 9911
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Information in this news release may contain forward looking information. Statements containing forward looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results and are believed to be reasonable based on information currently available to the company.
There can be no assurance that forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Readers should not place undue reliance on forward-looking information.
The forward-looking information contained in this news release is as of the date hereof and Morro Bay does not undertake any obligation to update publicly or to revise any of the included forward looking statements contained herein, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Original Article: http://www.fscwire.com/newsrelease/morro-bay-negotiates-amended-option-agreement-pe115oles-project-durango-mexico
