01/28/2013 08:22 EST | Updated 03/30/2013 05:12 EDT

Goldgroup to buy Oroco Resources Cerro Prieto gold project in Mexico

VANCOUVER - Goldgroup Mining Inc. (TSX:GGA) has signed a deal to acquire a Mexican gold and silver property from Oroco Resource Corp.(TSXV:OCO).

Goldgroup said Monday that it will make an initial cash payment of US$4.5 million to acquire Oroco's Cerro Prieto project in Sonora state. Goldgroup will also make a US$1-million investment in Oroco through a private placement of units.

The deal also calls for Goldgroup to pay up to an additional US$13.5 million, based on a percentage of future gold production at the project.

Cerro Prieto is located in northern Sonora state, with mineral concessions in an area of about 7,000 hectares.

Vancouver-based Goldgroup is a miner active in Mexico with a portfolio that includes its 100 per cent owned advanced stage gold development project Caballo Blanco in Veracruz state and a 50 per cent interest in DynaResource de Mexico, S.A. de C.V., which owns 100 per cent of the San Jose de Gracia gold exploration project in Sinaloa state. The company also owns and operates the Cerro Colorado gold mine in Sonora.

Besides Cerro Prieto, Vancouver-based Oroco has the 193-hectare Xochipala property in Mexico's Guerrero state.