Latin Resources (ASX: LRS) and Hong Kong's Junefield Group are set to commence a highly anticpated maiden drilling program at the company's Mariela Iron Project in Peru this month after receiving government approval.
The Ilo region has become one of the "hotspots" for copper discoveries and is a renowned IOCG district which should see lightly capped ($37m) Latin Resources being watched closely when drilling commences.
There has been significant investment by mining major companies and pegging of property.
The company has received the "Constancia Aprobacion Automatica" from the office of the Director General of the Ministry of Energy and Mines. This is the final regulatory approval required before drilling could commence on the Mariela property.
A drill rig is expected on site at Mariela within two weeks, with drilling to begin shortly after.
A total of 20 diamond drill holes are planned to test a magnetic gravity anomaly which measures 3 kilometres by 1 kilometre and is interpreted to be up to 200 metres thick.
Buried beneath between 30 metres and 100 metres of alluvial sand cover, the anomaly comprises a magnetite rich core flanked to the east and west by the gravity anomaly.
The drilling program will be managed by Hong Kong-based Junefield Group as part of an Earn In Option Agreement. This agreement allows Junefield to earn up to a 70% stake in Mariela by funding all activities to the completion of a Bankable Feasibility Study or to a total cost of A$35 million.
Latin has previously touted plans to fast track exploration activity on its tenements in Peru
Latin's Mariela Project comprises seven contiguous mining concessions that cover 5,200 hectares in the Islay Province of Arequipa, Southern Peru.
Importantly, the anomaly identified at Mariela occupies a similar geological setting to that of the Marcona deposit in south-central Peru.
Marcona is the preeminent central Andean iron oxide deposit, containing about 1.9 billion tonnes of ore at a grade of 55.4% iron.
Mariela also has potential for coincident copper gold mineralisation.
The project is well situated in terms of infrastructure, lying immediately adjacent to a major road transport route and just 60 kilometres from the mining port of Ilo.
The onset of a drill turning at Mariela is a milestone for Latin Resources given the significant investment and exploration funding from Junefield Group, struck in late 2011. Final approvals for drilling have set the stage.
Mariela is located in a renowned iron oxide, copper and gold district (IOCG) and importantly is proximal to highways and port.
Latin Resource's managing director Chris Gale snared the investment and exploration funding from Hong Kong's Junefield Group in late 2011. The founder of Junefield is reputed to be worth a cool $3 billion and Junefield itself, has been drilling for 12 months at a property around LRS's Ilo and Mariela project and known to be extremely "bullish" on exploration potential of Latin Resources' project.
Junefield Group will manage drilling at Mariela.
The agreement struck by Gale and Junefield would see the latter earning up to 70% of the Mariela Project by funding all activities to the completion of a Bankable Feasibility Study or to a total cost of A$35 million. Which is a significant sum and vote of confidence in the potential of Mariela perceived by the Junefield Group billionaire founder.
Not to be forgotten, 300 kilometres north of Mariela is Metminco's (ASX:MNC) large 926 million tonne (and growing) Los Calatos copper discovery, generated from 21,200 metres of drilling. Metminco has a market valuation of over $330 million.
What should also not be discounted is the recent M&A activity and acquisitions by major mining companies in the Ilo region which is a testament to the potential of the area for discovery of large deposits.
Investment by major mining companies including BHP Billiton (ASX: BHP) and Antofagasta (LON:ANTO) in the Ilo region of Peru which have upwardly re-cast valuations and investment multiples. BHP has now pegged over 400,000 hectares of ground while Antofagasta has over 600,000 hectares.
With attention re-cast on Latin Resources with results from drilling due in June, there is potential for significant valuation uplift for the company given its Guadalupito project and "blue sky potential" of Ilo and Mariela projects in 2012, particularly given the low $37 million valuation given to Latin Resources and the $330m valuation afforded to Metminco.
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