Ecuadorian, Newcrest form JV in Peru

Australian gold miner Newcrest Mining and Ecuadorian Minerals (EMC-T) plan to acquire the Ayapata gold project in southern Peru.

For its part, Ecuadorian can pick up the 10-sq.-km property, subject to a 5% net profits return royalty. Alternatively, the property owners can accept a 1.5% net sales royalty, or a minimum of US$100,000 annually, whichever is greater.

Ecuadorian has also agreed to make a single cash payment of US$85,000 and spend US$300,000 on the property during the first year.

Through a wholly owned subsidiary, Newcrest can earn a 65% interest in the newly formed Peruvian company, Minera Ayapata, by spending US$1.5 million over three years (including Ecuadorian’s work commitment from the underlying agreement). Newcrest can earn another 10% by producing a bankable feasibility study; alternatively, Ecuadorian has the option of funding its 35% interest.

James Kasten, spokesman for Ecuadorian, says the company had been negotiating a deal with the property owners for some time before Newcrest became involved. When Newcrest arrived, Ecuadorian was happy to have a ready-Made major partner for the project.

Meanwhile, Ecuadorian has acquired an additional 140 sq. km around the main project area, under the same terms with the property owners.

The region is underlain by lower Paleozoic metasedimentary rocks. Gold mineralization occurs in multiple, stacked, gold-bearing quartz veins hosted in sedimentary rocks. The veins (which carry high-grade gold values) are found in lower-grade, flat-lying manto zones, 30 to 50 metres thick.

Newcrest has already mobilized a drill rig to the property and will begin a program consisting of four to six holes.

To date, both Newcrest and Ecuadorian have conducted panel sampling across the mineralized zone. Results include 127 metres grading 1.4 grams gold per tonne; a 45-Metre interval grading 3.6 grams; 100 metres at 1.3 grams; 70 metres at 1.26 grams; and 65 metres at 1.28 grams.