Hawkeye Gold & Diamond has signed a letter of intent with a third-party independent vendor to acquire a 50% interest in the La Cobriza project in Mexico for $4.5m.

This gold and silver project is situated next to the Tayoltita mine of Primero Mining Corp and 125km north-east from Mazatlan and 150km from Durango City.

It is located at the centre of the famous San Dimas mining district, which produced 9.5 million ounces of gold and 750 million ounces of silver since its discovery.

Cobriza is a 200 hundred year old Spanish mine that was in production since the early 1800s until the 20th century. More recently, it has been further explored with occasional production since 2006.

"The study confirmed 12,000t with grades of gold 1.5g/t and silver of 622g/t."

However, the properties were not explored using modern techniques such as diamond drilling.

In 2006, the Mexican Government conducted a small study with an investment of $40,000 to find out the value of Cobriza's reserves. The study confirmed 12,000t with grades of gold 1.5g/t and silver of 622g/t. 

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Olagaray and Madero conducted the first modern studies that put the mine’s potentiality at more than 3,750,000t. Multiple studies have been conducted since then but these reports were not NI43-101 compliant documents.

The first report was issued by Dr Peter Megaw in 2004 and the second study was published in 2007 by Dr Lawrence Sookchoff, which both validated the merits of Cobriza project.

The signed letter of intent carries a 45-day due diligence period, when the company can visit the site and evaluate the property.

Hawkeye plans to conduct a detailed mapping, evaluate the processing plant and a detailed analysis of the cost of refurbishing the existing plant. It would take around three months to complete.

If the company chooses to move forward with the property then a definitive option purchase agreement would be prepared and forwarded to the TSX Venture Exchange for acceptance.

Hawkeye Gold & Diamond president and CEO Greg Neeld said: “While the La Cobriza project is early stage, the project has been a past producer. We are attracted by the reported grades, widths, and strikes of the known mineralised structures, its proximity to a known high-grade Au-Ag deposit, and the presence of an existing Mill.

“Near-term gold and silver production for Hawkeye is consistent with Hawkeye's new corporate model for acquiring projects with cash-flowing opportunities and Blue Sky Discovery upside. Cash-flow positive projects will provide Hawkeye with the ability to self-finance its projects, reduce dilution, resulting in increased shareholder value."