(MENAFN- ProactiveInvestors)
() has positioned itself on a pathway to copper production in Chile with a binding term sheet to earn up to 100% of the Filipina Copper Project through a joint venture with Chilean company Minera Activa.
The Project has an existing Measured Indicated and Inferred Foreign Resource Estimate (NI 43-101) of 9.3 million tonnes at 0.80% copper and 0.23 g/t gold completed by GeoEstima in September 2014.
After successful due diligence period and a final agreement Latin will need to upgrade the present foreign resource estimate to a compliant JORC estimate.
The agreement allows Latin to earn into the project by payments over a four year period.
The project has mining permits to allow immediate small scale production and is supported by infrastructure in one of Chile’s premium copper districts.
A small scale operation producing copper rich ores could be sold to Chilean state company ENAMI´s plant in Vallenar located 38 kilometres away from the project area.
Mines in the area are operated by global heavyweights Anglo America Freeport and Antofagasta along with Australia's ().
The Joint Venture Agreement is currently being drafted with a view to being signed within 60 days.
A legal due diligence will also be carried out through the 60 day period.
Extensive mining data
The project hosts an extensive database with 37000 metres of drilling undertaken between 1990 to 2013 by current and previous project owners.
This has produced a Foreign Resource Estimate (NI 43-101) of 9.3 million tonnes at 0.80% copper and 0.23g/t gold completed by GeoEstima in September 2014.
A JORC Resource estimate could be turned around in about a year and would cost in the region of A$1 million to A$1.5 million.
To provide some comparison on grade Productora resource is at 214.3 million tonnes at 0.48% copper 0.10g/t gold and 138ppm .
Chris Gale managing director for Latin commented:
“We are extremely pleased that we have secured a project that has a reported and current NI 43-101 resource that has the potential to take into copper production.
“The Filipina Project represents a tremendous value creating opportunity for with a potential near term production and cash flow generator for the company”.
Key terms of joint venture:
- An investment into the project of US$2m over an 18 month period to earn 25%.
- An option to invest a further US$5m to Bankable Feasibility Stage (BFS) to earn a further 24% for a total of 49% in the following 18 months (36 months). Latin must exercise this option to maintain its 25% interest.
- An option to acquire the remaining 51% by paying US$2m to Minera Activa by month 36 (to earn a further 6% share to take Latin to 55%) and a further payment of US$10m to Minera Activa by month 48 for the remaining 45% to take Latin to 100% ownership.
- On signing the JVA Latin may appoint up to 4 nominees to a Joint Venture management committee and will have control of operations on the projects.
- Latin may at its election bring in a third party to assist with funding investment in the projects.
Latin is understood to be discussions with a number of local and overseas financial institutions and funds to fund the Filipina project which could include equity or debt or a combination of both.
Each investment stage is subject to all necessary shareholder and regulatory approvals.
Analysis
has positioned itself to transition to become a near tem copper producer at a very reasonable acquisition price with joint venture payments staged over time for a company that has traditionally been viewed as just an explorer.
The addition of these assets to the company's portfolio would see MD Chris Gale transforming the company to small scale operation producing copper rich ores that could potentially be sold to Chilean state company ENAMI´s plant in Vallenar located 38 kilometres away from the project area.
This would generate cash flows and potential earnings for Latin.
Adding to the attraction of the Filipina project is the grade of the resource at 0.8% copper well above 's Productora grading 0.48% copper.
The Filipina mineral resource will need to be recast to compliance with JORC Standards which could be done within a year for between $1 million and $1.5 million.
Filipina also has exploration upside and a key attraction for the acquisition is its location in the northern part of Chile which provides exceptional infrastructure including copper toll processing plants power smelters and refineries.
It also houses a well-developed mining community.
In all this venture adds a new production dimension to Latin's portfolio and a potential cash flow generating asset.
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