PERTH (miningweekly.com) – Mexico-focused mineral explorer Azure Minerals has inked an agreement with the Mexican subsidiary of Canada’s Teck Resources to acquire the Alacrán copper project, in the Mexican state of Sonora.

Under the terms of the agreement, Azure would acquire full ownership of the Alacrán project by spending $5-million on exploration within the first four years of the agreement, as well as issuing 100 000 of its own shares to Teck on the signing of formal documentation, and a further 400 000 shares at the completion of the capital expenditure.

Azure would be required to spend a minimum of $2-million over the first two years, before being allowed to withdraw from the project.

Teck would retain the right to earn back a 51% interest in the project by sole-funding $10-million of expenditure, which would include a $500 000 cash reimbursement to Azure.

Furthermore, Grupo Mexico, the owner of the adjoining Cananea copper mine, would retain a 2% net smelter royalty over future mineral production from the Alacrán mine.

Azure told shareholders on Wednesday that the Alacrán property had only been lightly explored, and had the potential to host large porphyry copper deposits and smaller higher-grade deposits.

“I would describe Alacrán as the best under-explored copper project in Mexico. Located in North America’s premier copper producing district, which stretches from northern Mexico into Arizona, this is one of the world’s great copper mining provinces and the Cananea-Alacrán district is right in the middle of it,” said Azure MD Tony Rovira.

“This acquisition adds another very exciting, high-quality asset to the Azure portfolio, and will allow us to continue to progress our copper-focused exploration and development programme, while concurrently benefiting from Rio Tinto’s exploration of our Promontorio project.”

Under the terms of its agreement with Rio, the major’s subsidiary Kennecott Exploration had 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.