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Mariana Resources and Cliffs Natural Resources finalise Chile exploration JV

Mariana Resources (LON:MARL) and Cliffs Natural Resources (NYSE:CLF)  have now signed a definitive agreement in respect of their proposed joint venture to explore the SCM Mariana Area (NYSE:SCM), which covers 92,000km² in north-central Chile.

The partners will explore for iron-oxide-copper-gold deposits (IOCG) in the SCM, which hosts the 44km² Buenaventura and the 46 km² Perro Chico IOCG projects, as well as a 900km-long zone which extends from Tocopilla to La Serena. The terms of the joint venture were initially agreed back in April 2010, when the parties signed a letter of intent.

"This alliance with mining major Cliffs, which has effectively been underway since January, adds considerable impetus to our programme, fusing Mariana's extensive Chilean exploration experience and Cliffs' mining and metallurgical expertise,” Mariana MD John Sutcliffe said. “It is maximising the opportunity in this area, which includes both the Perro Chico and Buenaventura JV projects.”

Under the agreement, Cliffs can acquire 51% interest in the Sociedad Contractual Minera Mariana (SCM Mariana) subsidiary, through the sole funding of a US$2M exploration programme within two years. Subsequently, Cliffs may then acquire an additional 19%, taking its stake to 70%, by spending a further US$1M in the following year.

Cliffs will also reimburse Mariana for expenditure incurred in the SCM since January 2010. SCM Mariana's current management will operate the project through mutually agreed work programmes.

Should Cliffs secure a 70% interest in SCM Mariana, each party will contribute its share of funding requirements. Should one of the partners' interest shrink to below 10%, said interest will be converted into a 2% royalty on net smelter returns on any subsequent production.

"The agreement provides Mariana with the funding to implement our IOCG programme within the SCM Mariana Area, in tandem with our focus on defining a resource at our Las Calandrias gold-silver project in Argentina using the funds recently raised," Sutcliffe added.

The SCM covers the larger part of Chile's Second region, Antofagasta and the Third Region, Atacama. Any prospect subsequently identified by Mariana or Cliffs outside an excluded area will be subject to the agreement  but either party may decline leaving the other party free to proceed on its own. This will allow either party to pursue non-IOCG targets.

Mariana remains free to explore, in its own right, for any target outside the SCM Mariana Area.

Last month, Mariana reported results from reverse circulation (RC) drilling, at the Perro Chico IOCG project, which encountered wide zones of strongly anomalous copper and gold. The RC programme consisted of five holes for 1,756m in the 549 ha Bugueño option area surrounding SCM Mariana concessions.

The latest drilling at Perro Chico got underway at the end of May. Drilling at the Belleza target covered two holes, PC-RC-08 & PC-RC-04. PC-RC-08 was drilled 200m north of PC-DDH-01, which intersected 40m of 0.6% Cu in 2009, intersected strongly anomalous gold and copper hosted by skarn-altered sediments, with 42m at 0.1% Cu and 0.5g/t Au from 6m, the intersect including an interval of 10m at 0.2% Cu and 1.1g/t Au. PC-RC-04 was drilled 480m north of PC-DDH-01, and it intersected anomalous copper over 10m from a depth of 40m.

Three holes tested a magnetic anomaly target, located mainly in the SCM Mariana concessions. The three scout drill holes - PC-RC-05, 06, and 07 - tested a large gravel-covered target, outlined by 3D inversion modelling of a 2.5x1.6km ground magnetic anomaly. The holes were spaced between 1-1.5km apart and two of the three encountered wide intersections of strongly anomalous copper and gold, by volcanics and sediments:

In PC-RC-05, a 132m zone at a depth of 234m, averaged 405ppm (parts per million) Cu and 0.1g/t Au with up to 2m at 3g/t Au. Mariana said that the hole's geology was “related to minor veinlets and disseminations of chalcopyrite and pyrite and IOCG style alteration, hosted by magnetite-rich andesites.” 

Hole PC-RC-07 encountered an 80m zone from a depth of 82m, which averaged 600ppm Cu, 0.3g/t Au and 10% Fe, and included 16m at 0.8g/t Au and 17% Fe from 136m. 

According to Mariana, the results indicate potential for IOCG mineralisation within the target area.