Dynasty Metals & Mining announces that it has entered into a definitive three-year agreement with Green Oil to act as contractor for the development of specific mining concessions within the Dynasty Goldfield project in southern Ecuador.
Under the terms of this agreement, Green Oil will focus on surface excavation of mineralized material on three of Dynasty’s mining concessions within the Dynasty Goldfield Project, each of which is fully permitted and qualified under Ecuador’s special regime for small scale mining.
The designation of ‘small scale’ allows for the open pit mining of up to 1,000 tonnes per concession per day. Within two months of commencement of mining activities, Green Oil must excavate a minimum of 400 tonnes per day and 750 tonnes per day by the beginning of the third month.
Green Oil has the right to mine open pitable surface material only and Dynasty retains the right to explore and develop any and all underground mineralization on these three concessions. Dynasty retains all rights to mineralized material developed underground within or beyond the three year term of this agreement.
Once government approval has been granted, Green Oil will begin construction of two roads,, under the direction of Dynasty, connecting the project area to a main transportation route. Construction will begin no later than 15 days following Dynasty’s making the requisite reclamation bond payment to the Ecuador government.
Green Oil will bear the cost for the road construction as well as for all development, mining and transportation of mineralized material.
The terms of the arrangement specify that Green Oil will begin exploitation (open pit excavation under the direction of Dynasty) within 60 days of commencing road construction. Green Oil will be responsible for transportation of mineralized material from the point of excavation to the Zaruma processing plant, approximately 180 km away.
Green Oil is also responsible for securing the mineralized material during transport and tracking truck loads via satellite from the point of excavation to the Zaruma mill.
Green Oil’s compensation will be based on the cash equivalent of 35% of refined gold sales and 10% of refined silver sales from the concessions defined under this agreement only using international pricing of both commodities for payment calculation. Green Oil will cover the proportional cost of transportation and refining costs as per the above percentages.
In addition, the agreement with Green Oil contains an unsecured loan provision for a total of US$500,000. As a gesture of goodwill, Green Oil has advanced the Company US$170,000 to date and will provide the additional US$330,000 within the next three business days.
The Company intends to use loan proceeds for general corporate purposes and working capital. Repayment of this loan will be made in three equal installments in months three, four and five following the commencement of mining activities with financial resources coming from commercialization of relevant production.
"We are extremely pleased to announce our arrangement with Green Oil and believe they will be a valuable partner in the early stages of development at Dynasty Goldfield," commented Dynasty CEO Robert Washer.
"This project has a mineral resource of approximately 1.1 million ounces of gold in the measured and indicated categories contained in nearly 7 million tonnes. Mineralization breaches the surface so beginning with a number of small to medium sized open pits is a prudent and efficient method to begin working this project. Green Oil has both the earth moving expertise as well as the appropriate equipment required to allow this project to begin generating cash, which may be used for future expansion and working capital."
Brian Speechly, a Fellow of AusIMM (Australian Institute of Mining and Metallurgy), a director of the Company and a "qualified person" within the definition of that term in the National Instrument 43-101, has reviewed and approved the technical information contained in this news release.