Estrella Gold Corp (CVE:EST) has said that its joint venture partner, Mines Management (TSE:MGI) (NYSE MKT:MGN), has decided to continue with the exploration program at the LaEstrella Gold-silver project in central Peru as part of an agreement to earn a 75 per cent stake in the asset.
Mines Management has notified Estrella of its intent to continue with the project, already making the annual earn-in lease payment under the terms of their agreement.
The joint venture partner has also submitted proposed modifications to the two parties' exploration drilling permit to Peruvian regulatory agencies, and says it is awaiting approval for these changes.
"Estrella is extremely happy that that Mines Managementhas decided to continue exploration work on the La Estrella project for a second year," said president and CEO of Estrella, John R. Wilson, in a statement released late Tuesday.
"Mines Management's work on the project during 2012 has been encouraging, and both their drilling and 3D-IP/Resistivity work indicate potential for further enlargement of the known mineralized zone," he said, adding that the company anxiously awaits the results of Mines Management's next phase of exploration work.
Indeed, during 2012, eight holes were drilled at La Estrella, seven of which intercepted significant thicknesses of gold and silver mineralization. Notable intercepts included 112.8 metres at 0.41 grams per tonne (g/t) gold and 21.4 g/t silver, which the companies say expand the known area of mineralization deeper on the west and southwest side.
In addition, a 3-D geophysical survey found a large, previously unknown area of "anomalous chargeability extending north and northwest" from the 2012 area of interest for a distance of about 1,400 metres, the joint venture partners stated.
Mines Management said it expects that targets for the next phase of drilling will include sites across these new chargeability trends, as well as targets to follow up on high grade silver intercepts.
So far this year, along with the modified exploration permits so as to expand the areas prospective for drilling, metallurgical studies were also done, and are expected to wrap up this month. Other plans will be decided in accordance with Mines Management's cash balance.
La Estrella is spread across 2,500 hectares of land within the Central Peru Polymetallic Belt, and is located 130 km south of Huancayo in a region with a history of silver mining dating to the 1500s.
It is therefore in an area of established infrastructure, with roads and electricity, and lies within 30 km of Minera Buenaventura's historic Julcani Silver Mine, which began operation in 1955.
To earn a 75 per cent stake in the project, Mines Management has to spend $5 million in exploration, as well as complete a preliminary economic assessment report.
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