El Roble is located 25 kilometres east of the Chilean port city of Caldera within the world class Atacama IOCG province and is close to Coro Mining Corporation's 94 million tonne at 0.5% copper Cerro Negro copper mine.
Due diligence rock chip sampling had returned up to 28.83% copper and the mineralisation has been mapped over a 6 kilometre strike.
"We are very excited by the potential acquisition of the El Roble copper project in Chile. This project has the potential to deliver near term production and generate cash flows to fund further exploration activities and enable us to become self-funded within a short time frame," managing director Zeffron Reeves said.
"Copper mineralisation at El Roble has been mapped over a 6 kilometre strike length with some startling copper grades being mined from small scale mining activities, with regularly shipped grades to local toll plants being in excess of 12% copper and our due diligence work has confirmed this."
"In addition, the El Roble copper project is close to existing world class producing mines, but it is also within close proximity to transport and processing infrastructure. As a result, this project has the potential to provide near term, high grade copper production with limited capex spend.
"Mining Group's strategy is to become self-funded through the discovery of economic widths of high grade near surface copper at the El Roble project using modern exploration techniques. If we can succeed in executing our strategy, this project will be transformational to Mining Group."
El Roble covers 6,000 hectares that has been unexplored with modern techniques. It has the potential to provide near term, low CAPEX, high grade copper production.
High grade copper mineralisation occurs within a strike extensive vein system that has had historical production of about 1 million tonnes of ore grading more than 9% copper from four major historic mine areas where the vein width increases with depth.
Orebodies occur as high grade lenses within the vein system, sometimes extending over 100 metres along strike and down dip and having widths up to 12 metres.
Two small underground mines are currently in small scale production at Descobridora and Veta Gruesa, which produce direct smelter copper ore at over 9% copper.
The company's due diligence indicates that the vein system is strike extensive, well mineralised and has the potential to host further high grade copper orebodies.
It has developed a strategy of becoming self funded through discovery of economic widths of high grade near surface copper using modern exploration techniques.
This would be achieved by finding repeats of thicker sections that were mined historically.
The company noted that high resolution magnetics would be a powerful tool in locating these structures as the copper mineralisation is associated with iron oxides.
It also pointed to regional evidence from Candelaria and Manto Verde that high grade veins could lead to larger deposits while its structural model suggests potential for a large deposit at depth.
In addition, historic surface waste dumps totalling an estimated 500,000 tonnes at between 1% and 2% copper have additional potential for cashflow.
Infrastructure is well developed with the project just 90 kilometres from the mining city of Copiapo while a sealed road is located within 10 kilometres.
In addition, two ENAMI toll treatment copper plants are located within 70 kilometres, offering a possible development option.
Mining Group has entered into an option agreement to acquire up to 90% of the Project through its 85% owned Chilean subsidiary Minera El Roble SpA (Minera El Roble).
Upon exercising of the option agreement preferred shares in Minera El Roble will be issued to the vendor so that the vendor will then hold 20% of the issued shares of Minera El Roble and the concessions will be transferred into the ownership of Minera El Roble. Mining Group will then hold a 68% interest and the introducer will hold 12% of the issued shares of Minera El Roble.
The total purchase price for Mining Group to acquire an initial 68% of the Project is US$8 million paid over a 48 month period.
Under the agreement, the company may elect to pay an additional US$8 million to the vendor at the completion of a feasibility study, or within two years of exercising of the option to acquire a further 10% of the project.
This payment will be made in the company's shares at an issue price calculated based on a 30 day VWAP prior to the date of exercise of the purchase option. The vendor has a reciprocal right to force Mining Group to make the aforementioned election to acquire the additional 10% during the period.
The vendor's final 10% of the Project will be free carried by Mining Group until the Project has been declared bankable. Upon declaration of bankability the vendor will be required to contribute or dilute as per an industry standard formula.
We view this development as value accretive in the short and medium term.
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