29th Oct 2015 08:45
LONDON (Alliance News) - Herencia Resources PLC on Thursday said it has signed a binding term sheet to acquire the Pastizal copper project in central Chile, which lies next door to its existing flagship copper project.
The miner, which already has operations in Chile, said it has executed a right to fully acquire the project which is adjacent to the company existing flagship Picachos project.
Herencia shares were up 8.8% to 0.0925 pence per share on Thursday morning.
Herencia said it has preserved its cash position by arranging the deal to have "minimum option payments" over the initial 12 months. Herencia will pay no upfront fee and only pay the first USD50,000 after six months and a further USD160,000 after one year. After two years it will pay USD250,000 followed by a final USD400,000 payment a year later.
That means Herencia is paying a total of USD860,000 for the project with no immediate payment. However, it has also agreed to pay a USD0.05 per pound royalty up to 4.0 million tonnes of ore treated from the project.
That payment and royalty will be made to Consultoria y Servicios Mineros SA, leaving that company with no assets following the transaction with Herencia.
Herencia believes the project could be a high-grade open-pit operation, which would supplement Herencia's existing production portfolio. As expected, the mineralisation at the project is very similar to its neighbouring project Picachos.
"Small scale artisanal mining is presently being undertaken by private miners via small open pit and underground mining operations. This limited scale production will be permitted to continue until Herencia is ready to commence its own production. However in the meantime this work should provide valuable geological and visual understanding of the mineralisation. This type of small-scale mining is typical in Chile," it said.
By Joshua Warner; [email protected]; @JoshAlliance
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