Placer options Peruvian gold target

Denver — Placer Dome can acquire a majority interest in the Santa Rosa gold property in southern Peru from Vancouver-based Andean American Mining (AAG-V).

Under an option agreement, Placer can earn an initial 55% interest in the property by spending US$3.6 million on exploration and paying US$2.2 million through to January 2004.

The major can increase its interest to 60% by proceeding with a feasibility study. By funding the study, it can boost its interest to 70%.

If Placer is unable to identify more than 2 million oz., the property would revert back to Andean American and Placer would retain a 2% net smelter return royalty to recover its costs.

In the event Placer outlines more than 10 million oz., Andean American would receive extra consideration in the form of a sliding-scale royalty.

Situated 120 southwest of the city of Cuzco, Santa Rosa consists of 20 concessions covering 13,340 ha. Placer Dome has identified more than 15 targets within a structural trend measuring 15 by 4 km. The most advanced of these is the Open-Pit zone, which contains a preliminary resource of 1.5 million tonnes grading 3.85 grams gold and 56.4 grams silver per tonne. Andean American has excluded the Open-Pit zone from its agreement with Placer. However, if the major makes a production decision, Andean will include the zone.

Virundo, another significant zone of mineralization, measures 900 by 900 metres and contains more than 20 underground workings from Spanish colonial times.

At Santa Rosa, mineralization consists of epithermal replacements, vein and stockwork within Cretaceous limestone.