Adrian, Skyline form JV in Peru

Adrian Resources (ADL-T) and International Skyline Gold (SK-T) will acquire a 63% and a 27% interest, respectively, in the Picuda copper-oxide property in southern Peru.

In return, Adrian must pay the private vendor US$1 million over four years and spend at least US$900,000 on exploration over three years.

Skyline formerly held an option from the vendor to acquire a 90% interest in the Picuda property.

If the 397-ha property is brought to production, the vendor will receive a 2.5% net smelter return royalty on copper oxide ore and a 2% NSR from copper sulphide ore, as well as any other ore produced on the property.

Exploration will be performed on a joint-venture basis. Should the property go to production, the partners would transfer their interests to a company to be named Minera Moquegua Peru. This company would be incorporated under the laws of British Columbia, and Adrian and Skyline would try to have its shares listed on the Vancouver Stock Exchange.

Two copper-oxide deposits on the property saw minor production from 1900 to 1940. The current vendor acquired the asset in the early 1990s.

Historically, copper oxide mineralization ran 2-3% copper and was mined on a small scale. The dominant copper oxide minerals are brochantite and antlerite, and since both these minerals are soluble in acid solutions, extraction costs are expected to be low.

As part of its due diligence evaluation, Adrian took 28 chip samples, which averaged 1.5-3 metres in length. Eight of the samples were taken from non-mineralized distal magnetite veins, and the remainder were collected from altered and mineralized exposures.

From the latter group of samples, 85% returned values in excess of 0.3% copper, whereas 45% were in excess of 1% copper. The six highest results from the northern mineralized body averaged 1.9% copper and 0.1 gram gold. From the southern mineralized body, the six highest assays averaged 3.1% copper and 0.22 gram gold.

The property is only 14 km from the port city of Ilo, and electrical power is easily accessible. The Southern Peru Copper Corporation refinery and smelting plant are nearby, as well.

The first phase of the Adrian/Skyline exploration program is expected to consist largely of diamond drilling.