Caledonia and Holmer in Cuban joint venture

Two juniors, Caledonia Mining (TSE) and Holmer Gold Mines (ASE), have formed an alliance to explore mineral prospects in Cuba.

Caledonia can acquire up to a 50% interest in Holmer’s Cuban properties by spending $5 million over five years. Caledonia must spend at least $1 million in the first year, after which time it can terminate the joint venture. If the company elects to continue with the partnership, it will be obligated to spend $1 million in each of the remaining four years, while retaining the right to terminate the joint venture after each successive year. The funding will primarily be used to advance the Loma Hierro silver project to production.

Caledonia will earn a 10% interest in Holmer’s share for every $1 million it spends on the Cuban projects. Holmer owns half of the properties, with the remainder held by GeoMinera S.A., a Cuban government entity. Loma Hierro is in the Pina del Rio mining camp in western Cuba. Initial drilling outlined a probable reserve of 550,000 tons grading 10 oz. silver per ton, and exploration to date indicates there is good potential to increase these reserves.

The deposit is amenable to open-pit mining, and metallurgical tests indicate excellent recoveries.

Holmer also holds an option to earn a half interest in six other properties, totalling about 1,400 sq. km, which have the potential to host gold, silver, copper, zinc and lead deposits.

Included in the land package is the Dora Francisco property, which surrounds the Loma Hierro concession and features two former copper-zinc producers. Yet another project is the San Fernando, situated in central Cuba, which includes a mine with significant copper-zinc reserves at a shallow depth and several geophysical and geochemical anomalies.

Holmer is negotiating to acquire interests in four more properties in western Cuba. Numerous prospects, including 18 former producers and 20 significant showings, have been reported on these concessions.