RE: Ownership QuestionThursday, December 01, 2005
BANDERA SIGNS OPTION TO ACQUIRE 60% INTEREST IN CINCO MINAS AND GRAN CABRERA
Bandera Gold Ltd. (“Bandera”) announced today that it has signed an Option Agreement with Minera San Jorge, S.A. de C.V. (“MSJ”) to acquire a 60% interest in the Cinco Minas and and Gran Cabrera Mexican mining properties (the “Properties”) by making option payments of $300,000, issuing 2,800,000 common shares of Bandera to MSJ and providing financing of $7,600,000 to MSJ over a five year period for the exploration and development of the Properties.
Bandera made an initial option payment of $50,000 to MSJ and has incurred approximately $11,000 in due diligence costs which will credited to Bandera and deducted from the initial option payment.
Bandera is required to make a final option payment of $250,000 to MSJ within 7 days of receipt of the approval of the TSX Venture Exchange (the “Exchange”) of the Option Agreement.
Bandera will be required to issue to MSJ 650,000 common shares in year 1, 900,000 common shares in year 2 and 1,250,000 common shares in year 3. The work commitments to be financed by Bandera are $800,000 in year 1, $1,300,000 in year 2, $2,000,000 in year 3, $2,000,000 in year 4 and $1,500,000 in year 5.
MSJ will retain a 2.0% Net Smelter Return on the Properties. Bandera has the right to purchase the remaining 40% interest in the Properties anytime within one year after Bandera has earned its 60% interest in the Properties by paying to MSJ 40% of the NPV of the Properties as defined in the Option Agreement by a 20% cash payment and the remaining 20% in cash and/or common shares at Bandera’s sole discretion.
The Properties are 95 km. north of Guadalajara in the Hostotoipaquillo Mining District, State of Jalisco, Mexico.
The Cinco Minas property is comprised of 12 licenses (Exploitation Mining Concessions) totaling 10,750 ha.
The Gran Cabrera property is 4,242 ha. comprised of three concessions for exploration and two for exploitation.
GM8