Megastar Development Corp. secured an option to fully acquire the mineral concessions that form the Rama de Oro project in Oaxaca, Mexico.
According to a May 10 release, Rama de Oro lies on a mineralization trend linking the Switchback gold-silver mine to the north and the San Jose silver-gold mine to the south.
The company signed the option agreement with private explorers Arizona-based Paradex Inc. and Chihuahua, Mexico-based Minera Zalamera SA.
David Jones, president of the private companies, will join Megastar's board, subject to customary approvals, and will act as a technical adviser for exploration in Mexico.
Megastar needs to pay Minera Zalamera US$35,000 in cash, issue 2.9 million shares and spend US$350,000 on exploration over two years to fully acquire the property.
In terms of prior exploration work, Rama de Oro has only seen reconnaissance geological mapping and rock chip sampling, which identified a 4-square-kilometer zone of quartz veining, silicification and clay alteration of volcanic rocks. Rock samples assayed anomalous values of gold, silver, arsenic, mercury and antimony, the company said.
Minera Zalamera will gain a 2% net smelter royalty once Megastar secures full ownership, which Megastar can reduce to 1% by paying US$1.7 million.