Photo by: Bloomberg
PERTH (miningweekly.com) – Mexico-focused explorer Azure Minerals has signed a farm-in agreement with Rio Tinto subsidiary Kennecott Exploration, which could potentially be worth an estimated $95-million.
Under the terms of the agreement, Kennecott has committed to sole-fund an initial $2-million over the next 12 months at Azure’s Promontoria copper project. The initial work would include airborne and ground geophysical surveys and sampling covering some 10 000 ha of the project area.
At the end of the 12-month period, Kennecott could elect to continue its exploration for a further five years, spending a total of $20-million on exploration to earn a 51% stake in the project area.
Upon earning a majority stake in the project, Kennecott could elect to earn a further 29% shareholding in the Promontoria project by spending a further $25-million within a further six-year period, taking its total earn-in expenditure in the project to $45-million.
In addition, once a joint venture (JV) is formed over the Promontoria project, Kennecott would credit Azure’s account with an amount equivalent to five times the junior’s total expenditure at the project on the date of the JV formation.
Azure said it expected to spend a total of $10-million at the date of the JV formation, leading to some $50-million being credited into the company’s account.
Until Kennecott has earned its 51% interest in the project area, Azure would continue its ongoing exploration activities on the Cascada and Promontoria deposits.
“This agreement will enable a significant acceleration in the current exploration and development programmes at Promontorio,” said Azure MD Tony Rovira.
“Importantly for Azure, the agreement allows us to advance our own exploration efforts around Cascada, while concurrently Kennecott will activate exploration throughout Azure’s large land-holding during the initial earn-in phase.”
The Promontorio project currently has a mineral resource of about 840 000 t, at 4.1% copper equivalent.
Azure would act as project operator during the initial stage of the farm-in, managing and staffing all activities under the direction and with the technical assistance of Kennecott.