Troubadour up 55% on B.C. gold project LOI

Gold ore (with much native gold) in a quartz vein from the Privateers Mine on the west coast of Vancouver Island, British Columbia. Source: Troubadour Resources Inc.

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Gold ore (with much native gold) in a quartz vein from the Privateers Mine on the west coast of Vancouver Island, British Columbia. Source: Troubadour Resources Inc.

Troubadour Resources Inc. [TR-TSXV] shares rallied sharply Friday March 15 following a resumption of trading after the company announced that it has signed a letter of intent that gives it the option to acquire all the issued and outstanding shares of Privateer Gold, the owner of the Surespan Gold Property.

Surespan encompasses the historic Zeballos high-grade gold mining camp on the northwest coast of Vancouver Island, British Columbia, covering approximately 13 km2.

Troubadour shares rose 55.56% or $0.05 to 14 cents on volume of over 1.8 million. The shares trade in a 52-week range of $0.08 and 25 cents.

The company has been engaged in the acquisition and preliminary exploration of its 100%-owned Amarillo Project, which is located 30 km west of Peachland in southwestern British Columbia. Amarillo covers 4,178 hectares and exhibits areas that are enriched in copper, molybdenum and gold. The property also contains area that hosts skarn-style mineralization highly anomalous to tungsten.

Zeballos was the site of a major gold rush in the early 1930s that resulted in the development of nine significant mining operations. Peak production was reached in 1940. However, mining activity slowed during World War Two. Advancement of the camp has also been hampered by fragmented ownership.

Production between 1934 and 1948 totalled 287,811 ounces of gold and 124,700 ounces of silver. Of that amount, 90% was mined in a six-year-period. Historic production from the Zeballos Camp up to 1982 amounted to 33,783 tonnes of milled ore, yielding 304,309 ounces of gold, Troubadour said.

However, Troubadour said the recent ownership consolidation, incorporating the majority of the camp’s former producers, along with important surrounding ground presents an opportunity for the junior to advance and attempt to unlock a major high-grade gold mining camp, Troubadour said in a press release.

“The recent discovery of the 88 Vein in the first modern day drill hole completed on the property provides evidence of this potential,” the company said.

Drilling conducted by Privateer Gold over the past two years encountered intercepts on the 88 Vein that include 1,386.50 g/t gold over 0.30 metres, 1,218.75 g/t gold over 0.20 metres and 436.17 g/t gold over 0.50 metres.

Under the terms of the letter of intent signed with Surespan Ltd. and its wholly-owned subsidiary Privateer Gold Ltd., the parties agreed to negotiate and settle the terms of a binding definitive agreement.

Under the LOI, in order to exercise the option, Troubadour must issue such number of shares, together with any shares subscribed for by Surespan under a private placement of the company equal to, but not less than 19.5% of the issued and outstanding shares of the company on a post-financing basis.

Troubadour has agreed to issue either 7.5 million common shares or pay $1.12 million in cash on the first anniversary of the signing of a definitive agreement, and 6.0 million common shares or $1.5 million on the second anniversary.

Troubadour will also be required to spend $350,000 on exploration prior to the first anniversary of the agreement and $650,000 prior to the second anniversary.

Under the LOI, an additional payment of 2.0 million shares would be required once the property enters commercial production or Troubadour succeeds in outlining a resource of 750,000 ounces of gold.

Troubadour said it is proposing to complete a $2 million private placement financing. However, the pricing terms of the private placement have not yet been determined.

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