Magellan Gold Corp. said Dec. 17 that it reached a preliminary agreement to toll treat mineralized material at its SDA mill in Mexico with the goal of securing a long-term processing deal.

The mineralized material is estimated to contain economically recoverable values of silver, gold, lead and zinc. A private, third-party supplier will source and deliver the material from a historical silver district within trucking distance of the mill.

Processing of an about 1,000-ton initial bulk sample is expected to start in December. If successful, the parties intend to proceed with processing at a rate of up to 3,000 tons per month.

Magellan said it is continuing to advance its El Dorado gold-silver project located 50 kilometers south of the SDA mill. The company has obtained quotes for contract mining, and environmental and blasting permits are in progress.

Magellan signed a deal in August to acquire El Dorado, which is targeted to supply ore to the SDA mill for about five years at a mining rate of 100 tonnes per day.