VANCOUVER (miningweekly.com) – Copper major Freeport-McMoRan has entered an option agreement with Northisle Copper and Gold to earn a 65% interest in the Pemberton Hills property, located on Vancouver Island.
The Pemberton Hills target is a 3.5 km by 1.5 km area of advanced argillic alteration similar to that observed at Northisle's Hushamu and Red Dog deposits.
According to Northisle, this type of alteration is often found overlying porphyry copper deposits. Further evidence of a buried porphyry copper deposit at Pemberton is the presence of anomalous copper intersected at the end of an historic 200 m deep drill hole within the altered area.
Under terms of the agreement, Freeport may earn an initial 49% interest in the property by paying C$50 000 cash to Northisle and funding a total of C$4-million in exploration expenditures over three years. The accord requires Freeport to commit to C$300 000 in expenditures in the first year, with subsequent optional additional expenditures of C$1.2-million before the second anniversary and a further optional C$2.5-million before the third anniversary of the agreement.
Northisle will be the operator during the first option period.
Following the first option, the partners will form a joint venture (JV) to operate the property under a shareholder's agreement. Freeport will then have a one-time right to acquire an additional 16% interest in the property, for 65% total interest in the property, by funding a further C$20-million in exploration expenditures over a four-year period.
If Freeport chooses to proceed with the second option and fails to complete the expenditures required, Freeport's interest will revert to the 49% interest as earned under the first option.
Should either party's interest in the JV be reduced below 10% through dilution, the diluted party will be granted a 2% net smelter return royalty (NSR). The NSR is subject to a buy-down provision that allows for the NSR to be reduced to 1% for a cash payment of C$2-million.