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  • Southern Hemisphere Bags US$25m Farm-In With Anglo American For Chilean Copper-Gold Project 0 comments
    Feb 6, 2013 9:16 PM

    Southern Hemisphere (ASX:SUH) has secured US$25 million in farm-in option for its Chilean project with Anglo American Norte, a chilean subsidiary of mining giant Anglo American, propelling its plans to become a multi asset copper-gold company.

    The deal follows close on heels of a farm in option with Lundin Mining on Southern's flagship Llahuin Copper/Gold project.

    A major resource extension drilling program is currently underway there.

    Southern's managing director Trevor Tennant said,"This is another significant event for Southern Hemisphere, and complements the important strategic joint venture we concluded recently with Lundin Mining Corporation at our Llahuin project."

    Under the latest deal, Anglo American can earn up to 75% equity in the Chitigua, Carboneras and Meteroritica exploration projects in Chile's north by spending up to US$25 million on exploration over 5 years.

    The agreement provides Southern Hemisphere with a free carry period of up to 3 years within which time Anglo can spend up to US10 million to earn 60% interest.

    Initially at least, Anglo is committed to spending US1.5 million to include at least 3,000 metres of drilling as well as a US$50,000 payment on signing and an additional US$150,000 per annum for up to 5 years.

    Deal terms

    The key terms of the deal with Anglo American include a US$50,000 initial payment to Southern upon signing of the agreement and payments of US$150,000 per year for three years, for a net of US$500,000 to be paid before 31 January 2016.

    The first exploration period requires committed expenditure of US$1.5 million by Anglo American for 3,000 metres of drilling within 18 months of inking the deal.

    An aggregate spending of US$10 million has to be achieved within 36 months of the agreement for a 60% stake.

    In the second exploration period, Anglo has the option to earn a further 15% equity by spending an additional US$15 million on exploration works.

    Chitigua project

    The project concessions cover an area of 172 square kilometres and there is evidence of intense geological alteration along and adjacent to the western fault with copper mineralization in previous small-scale mining excavations.

    Anglo American has recently completed an aeromagnetic survey at the Chitigua project with detailed geochemical sampling scheduled to start next week.

    Southern has spent US$2.3 million on exploration on this prospect, including ground-based induced polarisation surveys in two selected areas, the completion of 20 reverse circulation holes for 4,983 metres and seven diamond drill holes for 2,332 metres.

    It has also done some reconnaissance works at Carboneras and Meteoritica projects.

    Analysis

    The Chitigua farm-in follows close on heels of the US$35 million farm in at its flagship Llahuin copper-gold project also in Chile.

    There it has been having a spate of drilling success that could significantly bolster its current Measured and Indicated Resource of 145 million tonnes at 0.4% copper equivalent.

    The farm-in is yet another feather in Southern's cap and could potentially unlock further upside to its share price.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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