Daulton Capital Corp. Announces Agreement to Acquire Producing Costa Rican Gold Mine
NEW YORK, Nov. 8, 2012 /PRNewswire/ -- Daulton Capital Corp. (DUCP), a gold and precious metals exploration company, today announced the signing of a conditional Heads of Agreement to purchase a 50% stake in a gold mine in Costa Rica, Central America. The transaction is expected to close on or before November 21, 2012 with an 8K to follow detailing the deal structure.
On October 31, 2012 the company reached an agreement with publicly listed Ascot Mining PLC and its wholly owned subsidiary Veritas Gold CR S.A to acquire 50% of Veritas Gold CR S.A. Veritas Gold CR S.A owns and operates the Chassoul gold mine in Costa Rica.
ABOUT THE CHASSOUL PROPERTY
The Chassoul gold mine currently produces approximately 300 oz gold per month and it is planned to increase production to 500 oz per month concurrent with the ongoing program of reducing cash cost of production. It is anticipated that once production of 500 oz per month is achieved Chassoul mine will generate potential free cash flow of USD$500,000 per month. Veritas Gold will concentrate its efforts to expanding production at Chassoul and in the short term, aim to reach 2000 oz per month production and significantly increase free cash flow.
To date, all exploration, development and gold production at the Chassoul property has occurred within an area of just 12% of the existing 2 square kilometre concession. Therefore 88% of the concession is relatively unexplored. Similar mineralization is believed to extend in all directions surrounding the current concession area. Veritas Gold CR S.A has developed plans to expand the Chassoul concession area from the current 2 square kilometre to 10 square kilometers. This strategy has the possibility of substantially increasing the resource base over time.
Daulton Capital Corp's obligation under the agreement with Ascot Mining PLC is to pay $10 million by the issue of 100 million shares of Daulton to Ascot Mining Plc and to loan $2.5 million of cash to Veritas Gold on completion. The loan into Veritas Gold will be used for the retirement of debt of $2 million and a working capital loan of $500,000 to expand gold production at the Chassoul gold mine in Costa Rica. Fifty per cent of Veritas Gold CR S.A will be transferred to Daulton at completion.
Brian Smith, CEO, Daulton Capital Corp said, "The agreement with Ascot Mining Plc allows Daulton to immediately be involved in a producing gold mine, the ultimate objective for every young gold prospect. This acquisition will bring the company the benefits of being a gold producer from existing mining assets while we develop our ArxSprings gold mining project in Queensland Australia." He further exclaimed, "Daulton is ecstatic to be involved in and support the expansion plans Ascot Mining Plc and Veritas Gold CR S.A intend for the Chassoul gold mine and its surrounding concession and we look forward to sharing the success with our shareholders and investors in the months and years to come."