Power Metal signs option deal over Canada's Silver Peak

Power Metal Resources has signed an option agreement over the Silver Peak Project in British Columbia, Canada, it announced on Monday, which includes the Eureka-Victoria Silver Mine, the first Crown-granted mineral property in the province.

The AIM-traded firm said the agreement gives it the option of a 30-day exclusivity period for due diligence in respect of the project.

Should it decide to exercise the option, it would then secure the right to earn-in to a 30% interest in the project.

Power Metal said the acquisition of the 30-day option would cost £26,819, with £12,500 payable through the issue of one million Power Metal shares at a price of 1.25p, and £14,319 payable in cash.

If the option is exercised, the board said it would expand Power Metal operations into North American silver exploration, focussed around the first Crown-granted mineral property in British Columbia and a former high-grade working silver mine.

Power Metal said it would now undertake “accelerated” due diligence, and if that was successful, exercise the option and implement an early exploration programme.

The company said the Silver Peak Project consists of a portfolio of mineral claims over a system of high grade, intrusion related, polymetallic Ag-Pb-Zn-Cu veins - part of the historic Eureka-Victoria Silver Mine - at Silver Peak in southern British Columbia.

Originally discovered in the late 1800s, it said the Silver Peak mines reportedly exploited near-surface oxide material ranging 500 to 658 ounces of silver per tonne.

The underground mining via adits of the two main veins, varying in width from 1.5 metres to six metres, continued on a small scale under various ownership until 1981.

Underground sampling in 2011 along the strike of the Victoria Vein returned a grade of 8,889 grams of silver per tonne, with a grab sample from the Victoria Vein face assayed at 15,517 grams of silver per tonne, 4.3% lead, 2.94% copper and 2,756 parts per million bismuth.

Significantly, it said both the Eureka and the Victoria vein systems, which can be traced at surface for more than 625 metres each, were yet to be drill tested below adit level, with mineralisation open at depth, and resource potential “largely untested” along strike.

“The option over the Silver Peak Project provides Power Metal and its shareholders with exposure to a silver project with previous history of production in a safe jurisdiction and with a number of well-defined exploration objectives,” said chief executive officer Paul Johnson.

“We enter this opportunity at a time when silver has been experiencing a significant increase in price and when the underlying value of silver projects is, in our view, going to follow.”

Johnson said the company also considered that the silver project complemented its Alamo Gold Project interest in Arizona - the agreement for which was signed and announced to the market recently, and where exploration work was now underway.

“Taking both projects together, we are now beginning to build a robust North American precious metal focused portfolio, with strong exploration potential and backed by operational and advisory teams who are at the heart of mining and exploration in North America.”

At 0923 BST, shares in Power Metal were up 8.7% at 1.25p.