Elementos (ASX: ELT) has secured an option to acquire a 90% interest in the Mercedes copper project in northern Chile, which is located close to a cluster of world-class porphyry deposits 60 kilometres east of the Chiquicamata mining district.
Mercedes comprises 8,589 hectares of mining concessions and 21,200 hectares of exploration permit applications near to a region hosting large mines and deposits including BHP Billiton’s (ASX: BHP) 64 million tonne at 1.01% copper-oxide and 222 million tonne at 0.91% copper sulphide Spence mine.
The Atacama region is one of the largest copper producing areas, located centrally within the prolific northern Chile copper belt.
Other substantial deposits in the area include Codelco’s 10.5 million tonne at 0.55% copper Chuquicamata deposit, 7.2 million tonne at 0.37% copper Radomiro Tomic deposit and 1.3 million tonne at 0.94% copper Ministro Hales deposit.
The project contains structurally hosted, copper oxide mineralisation on surface with associated stratabound mantos in a volcanic sequence.
The average grade of mined copper oxide material in 2011 was 1.6%. Five selective samples assayed between 0.7-3.1% copper in different mineralogical environments across the project area.
No modern exploration has been undertaken at Mercedes. Small-scale intermittent mining has targeted high grade copper oxides across the property.
Elementos is planning two parallel strategies at Mercedes:
- Investigate the potential for delineating a copper oxide resource capable of being developed into a solvent extraction and electro winning operation. This could include consolidation with other known nearby copper oxide deposits; and
- Explore for copper-gold-molybdenum porphyry-style mineralisation, which is prolific in the district.
Exploration activities will include mapping, sampling, geophysical surveys and drilling of advanced targets. Importantly, Mercedes has a number of targets that can be drilled quickly.
Initially exploration activities will focus on the copper oxide target at Mercedes and the porphyry targets at Elvira.
An initial mapping and sampling program will be conducted in parallel with an airborne magnetometry geophysical survey, followed by induced polarisation geophysics as required.
The Chuquicamata district is well supported with infrastructure, including port facilities at Antofagasta, 280 kilometres southwest of the project area, a copper oxide toll treatment facility, 35 kilometres west of Mercedes, and an electricity distribution network.
Elementos will investigate water availability options including purchasing water from existing operators, acquiring water rights, and exploration drilling for aquifers at the Andean foothills in the eastern side of the project area.
The Mercedes project agreement has been structured as a series of options over four years. This will enable Elementos to complete a thorough exploration of the project before making substantial purchase payments.
No option payments are due for the first six months, enabling the company to complete a preliminary exploration program, including some drilling.
Elementos will then begin option payments of $50,000 per month for the next 12 months, increasing to $100,000 per month for the following 29 months.
Importantly, the company can withdraw from the project at any time during the four years with no penalty.
Half of the total acquisition cost of $10 million is payable at the end of the fourth year, with 25% each payable at the end of the fifth and sixth years.
Elementos will manage and fund all exploration, evaluation and development costs for the project, including minimum drilling commitments of 3,000, 4,000 and 5,000 metres in the first three years respectively.
Originally published at: http://www.proactiveinvestors.com.au/companies/news/24920/elementos-acquires-option-over-highly-prospective-copper-project-in-chile-24920.html