VANCOUVER (miningweekly.com) – Midtier miner OceanaGold has signed an option agreement with prospect generator Mirasol Resources, under which it is to acquire up to 75% of the project in five stages.

The definitive agreement requires multinational OceanaGold, with operations in New Zealand, Australia and the US, to make a first-year commitment of $1.25-million in exploration expenditures, complete 3 000 m of drilling, and make a $100 000 option payment to Mirasol on inking the accord.

La Curva, located in Santa Cruz province, Argentina, is a 36 100 ha exploration-stage gold project located at low elevation, in an area with good infrastructure. Mirasol's exploration efforts at the project to date have outlined three gold prospects at Cerro Chato, Loma Arthur and SouthWest, situated along the 6-km-long ‘La Castora’ gold trend, which represent compelling drill targets for high grade, low sulphidation epithermal gold and silver mineralisation, according to Mirasol.

A series of several other gold and silver prospects in the Curva West area warrant further exploration to define more drill targets.

After completing the first year exploration campaign, OceanaGold can choose to proceed with the balance of the initial earn-in obligations over four years from the date of the agreement to earn a 51% interest in the project, by funding cumulative exploration expenditures totalling $7-million (including the first-year commitment) and making staged cash payments to Mirasol of $1.5-million (including the first-year commitment). 

Mirasol will serve as operator for exploration for the first year in return for a 5% management fee, after which OceanaGold can choose to serve as operator thereafter or request that Mirasol continue.

On completing the Initial earn-in, OceanaGold may choose to increase its interest to 60% of the project by funding and delivering, within two years of the initial earn-in date, a preliminary economic assessment (PEA) that outlines an inferred resource of not less than 500 000 oz of gold equivalent at a cutoff grade of 0.25 g/t gold equivalent, for an openpit resource; or 500 000 oz of gold equivalent at a cutoff grade of 1.5 g/t gold equivalent for an underground resource.

After completing the PEA, OceanaGold can increase its interest to 65% of the project by funding and delivering, within two years of the PEA milestone, a positive feasibility study on the project. In parallel with the time it takes to complete the feasibility milestone, OceanaGold may choose to increase its interest to 70% of the project by funding and delivering a feasibility study suitable to be submitted to a recognised financial institution as a basis for lending funds for the development of a mine and approval of a decision to mine by the OceanaGold board.

At the decision-to-mine stage, Mirasol can choose to either retain 30% of the project by funding its proportionate share of further development costs, or exercise its right to require that OceanaGold fund its proportionate share of the development costs, to be repaid from 50% of Mirasol's net cash flow from the project, in exchange for Mirasol reducing its interest in the project to 25%, and thereby increasing OceanaGold's interest to 75%.    

The earn-in agreement provides that OceanaGold has the right to extend one of the time periods to complete either the PEA milestone or the feasibility milestone by making cash payments to Mirasol of $250 000, or $500 000 respectively. If OceanaGold fails to complete the PEA milestone, its 51% interest shall revert to 49% and Mirasol will assume management control of the project. If OceanaGold fails to complete the feasibility milestone, then its 60% interest shall revert to a 51% in the project.

The agreement includes a dilution provision whereby if either party's project equity position should fall below 10%, then their interest will convert into a 2% net smelter return royalty.

Mirasol and OceanaGold are currently optimising the drill programme design for the initial drill test of the La Castora Trend gold prospects. Drill permitting for the project is well advanced and is expected to be completed within the current quarter. Mirasol and OceanGold are monitoring the weather conditions to determine if the drill programme will start during the southern hemisphere winter months, or to defer the start of drilling until the September spring period.