QNB Metals has signed a binding letter of intent (LOI) to purchase a 100% stake in Minagoldchoix, a 99.97%-owned Mexican unit of Analog Gold .

The LOI facilitates a business combination of QNB Metals and Analog. It will be implemented through the reverse takeover of QNB Metals by Analog.

Upon the completion of the consolidation, Analog will receive $38.6m in the form of 96.5 million common shares and 17.9 million common share purchase warrants from QNB Metals.

Minagoldchoix is the owner of the Tres Oros gold property along with two other properties.

Situated 47km south-east of Mazatlan, Mexico, the Tres Oros property is an active pilot mine that entered into production in 2020.

Strategically located near a stable modern electric grid, the polymetallic mineralised structure is said to be opened laterally and at depth.

The company said it has ‘access at 600tpd flotation plant and operate the oxide and transition mineralised rock zone for the first 50 vertical metres and 350 metres longitudinal’. 

It plans to start the underground development of the project in the fourth quarter of this year.

QNB Metals CEO Stéphane Leblanc said: “This is an exciting transaction for the corporation and its shareholders. This is an operational mine, with an experienced management team and a clear plan to pursue its development.

“Provided our due diligence is completed successfully, Analog intends to increase the capacity by completing the undertaken upgrade of the mine’s equipment, its plant, and increase the labour force.”