LATIN AMERICA SPECIAL — Joint-venture agreement — Phelps

The mystery company previously reported to be eyeing five Peruvian prospects held by Arequipa Resources (VSE) has turned out to be none other than Phelps Dodge (NYSE), one of the world’s largest copper producers.

In early February, Arequipa announced a joint venture agreement on five of its copper porphyry targets in Peru: Los Calatos, Cerro Blanco, Moquequa, Rio Tambo and Promota (T.N.M., Feb. 13/95).

The joint venture will see a minimum of US$10 million spent by Phelps Dodge on the Los Calatos property over four years, together with cash option payments to Arequipa totalling US$1.6 million over the same period. Phelps Dodge will also be required to provide a feasibility study and a US$5-million payment to Arequipa in order to earn a 60% interest in the property. Arequipa notes that if the exploration program is successful, it will hold a 40% interest in a major deposit with little risk to its shareholders.

Beginning with the third year of the agreement, up to an additional US$900,000 will be spent over the succeeding 3-year period on the properties other than Los Calatos.

If Phelps Dodge elects not to proceed with work on Los Calatos, up to a total of US$6 million must be spent on the other properties over six years (beginning when Los Calatos has been dropped).

Arequipa has an extensive land package in Peru, with many of its properties covering portions of the Southern Peruvian copper belt. In addition to concessions within this copper-producing district, the junior has acquired prospects with potential for disseminated gold targets and medium-sized copper oxide deposits.