EnviroGold has signed a farm-in agreement to acquire a majority interest in a small underground gold mining operation in the Pinglio area of Ecuador.

The operation, owned by Grumintor, has significant exploration potential over the 450ha mining lease area, EnviroGold said.

EnviroGold will conduct a review of existing data from previous RC drilling and channel samples, together with geological mapping, before nominating an exploration target, drilling programme and budget to establish resources.

EnviroGold will transfer the mining lease to a new holding company and issue Grumintor $1.5m in shares of the new entity.

EnviroGold can then take up to $8.5m of shares in the holding company within three years to acquire an 85% stake.

EnviroGold plans to use the funds subscribed in the farm-in-agreement for a drilling programme to establish indicated and inferred JORC resources as well as working towards the various approvals needed.