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Cinco Minas sale to net up to US$600mn, advanced talks continue, Southridge says

Bnamericas Published: Friday, November 23, 2012
A planned sale of the Cinco Minas gold project in Jalisco state, Mexico, could net US$600mn, Dallas based Southridge Minerals (Pink Sheet: SRGE) said. The company is currently in "advanced discussions" with two major NYSE-listed metal producers regarding the future of the property, Southridge said in a statement on Wednesday (Nov 21), and is evaluating alternatives. One of the interested parties is seeking a full acquisition of Cinco Minas, with the amount being discussed in the range of US$550mn to US$600mn, Southridge added. Preliminary documents have already been signed with the company, the statement said. Cash from the sale would allow Southridge to ramp up exploration and mining at its other Mexican properties, it added, which include Gran Cabrera, Los Compadres, La Esperanza, La Canita and El Horconcito. Southridge also said it is in "serious discussions" with a major gold producer regarding a potential joint venture agreement to develop Cinco Minas as an alternative to the sale. The JV would see the interested party invest about US$680mn to enable the company to mine the property. Due to the large size of the project, the involvement of a bigger second company would allow Southridge to "aggressively mine and explore the property at a much faster rate," the statement added, to benefit from current high gold values. Shareholders would benefit from a proposed one-off cash dividend of 20% of the proceeds of the sale or a possible quarterly cash dividend of a certain percentage of earnings from the JV, Southridge said. Cinco Minas has confirmed resources of 235,000oz gold and 23.3Moz silver with 80% of the known vein system yet to be tested, the company added.

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