Patagonia Gold Plc said Dec. 11 that it will proceed with the acquisition of the Calcatreu gold-silver deposit in Argentina from Pan American Silver Corp. for US$15 million after completing a recent £7.8 million share placement.

The option over Calcatreu was secured in April at the same time Patagonia signed the deal to purchase Pan American's Cap-Oeste Sur Este gold-silver project, which is also in Argentina.

Patagonia and Pan American agreed to further extend the deadline for Patagonia to exercise the option and execute a definitive agreement to Dec. 22, as the companies remain in talks to finalize the definitive deal. The option agreement was initially set to expire Oct. 24 and was previously extended to Dec. 8.

According to Patagonia, Calcatreu is estimated to host indicated resources of 8 million tonnes at 3.04 g/t of gold equivalent for 780,000 ounces of gold equivalent and inferred resources of 255,000 ounces at 2.32 g/t of gold equivalent. This resource model was completed in 2008 using a gold price of US$650 per ounces and a silver price of US$12.50 per ounce.

The company plans to explore the area immediately around the existing resource to increase the estimates before completing a feasibility study and developing the asset. Patagonia expects generating and drilling Calcatreu targets to take up to 18 months.