Brigus Gold has signed a letter of intent with Cangold to sell a 75% interest in its Mexican subsidiary that owns the advanced exploration stage Ixhuatan gold project in Chiapas, Mexico.

Cangold plans to file an updated Canadian National Instrument 43-101 report on the project and to complete a definitive option agreement with Brigus by 30 June 2011.

To earn a 75% interest in the Ixhuatan project, Cangold will pay Brigus a total of C$10m ($10.49m) and issue 20 million post consolidation shares over a three-year period as well as complete an independent third-party feasibility study on the Campamento deposit.

At that point, Cangold and Brigus will hold a 75% and 25% interest respectively and will be responsible for their pro-rata costs in jointly developing the Ixhuatan deposit.

Upon commencing commercial production, Brigus will receive a 2% net smelter return royalty and a payment of C$5 ($5.24m) per ounce of gold in the proven and probable category included in the feasibility study.

The closing of the transaction remains subject to Cangold completing its planned share consolidation and a financing.

The transaction, Cangold’s share consolidation and financing are all subject to receiving regulatory approval.