American Bonanza Gold Corp. (TSX: T.BZA, Stock Forum) announced that it has entered into a letter of intent with Suparna Gold Corp. (TSX: V.SUG, Stock Forum) with respect to a proposed mineral property acquisition and joint venture, whereby Suparna may acquire up to a 60% interest in certain mining claims and property comprising the Southwest target at the Copperstone gold mine in La Paz County, Arizona.
Copperstone is located in western Arizona within the Walker Lane mineral belt where it intersects gold provinces in southern California and western Arizona.
According to the American Bonanza Gold press release, the company holds a 100% leasehold interest in Copperstone, renewable at the company's option every ten years, and was last renewed in 2005.
During the last year, the company has gained new information about the nature and controls of gold mineralization at Copperstone.
The data now in hand for the Southwest Target, along with what has been learned from development of Copperstone, points to the possibility that another deposit exists in the Southwest Target area.
The company believes that the transaction with Suparna will provide the necessary corporate focus and resources to continue exploration of the Southwest Target.
Suparna will have the right to acquire an undivided 12.5% working interest in each of four consecutive years from the date of the definitive agreement to be entered into between the company and Suparna, a minimum of $500,000 in exploration expenditures must be incurred on the assets during each year.
In the fifth year, Suparna will have the right to acquire an additional undivided 10% working interest in the company's leasehold right, title and interest in and to the assets by expending a minimum of $500,000 in exploration expenditures to be incurred on the assets.
During the earn-in phase, Suparna will be the operator of exploration on the Southwest Target. Once Suparna has either acquired the 60% interest, or has ceased to make expenditures on the Southwest Target, the parties will form a joint venture agreement, and each party will be responsible for funding its share of ongoing exploration expenses.
Bonanza is currently operating the newly constructed Copperstone gold mine in Arizona.
On Wednesday, Bonanza rose 10% and was trading at $0.055 a share. The company had a market cap of $12.9 million, based on 234.4 million shares outstanding.