BHP Billiton (BHP-N) has entered into subscription and option agreements with Intrepid Minerals (IAU-V) to explore the Suaqui Grande porphyry copper-gold property in Sonora, Mexico.
Under the agreements, BHP will subscribe for 1 million units of Intrepid at 30 apiece. Each unit will comprise one common share plus a two-year warrant exercisable at 35 per share. Proceeds will fund a first phase of exploration on several porphyry copper-gold targets on the 90-sq.-km property. Intrepid will act as operator.
If BHP Billiton decides to continue past the first stage of exploration, and earn a half-interest in the project, it must commit to spend up to $2 million. After that, BHP can decide to form a 50-50 joint venture, which will be responsible for the next $4 million of work. BHP can then boost its stake a further 20% by advancing the project to mine status. Intrepid’s 30% share of project financing will be repaid to BHP Billiton from 85% of Intrepid’s share of net project cash flow. The underlying vendors retain a 4% net smelter return royalty, which can be reduced to 2%.
The agreements are subject to regulatory approval.
The Suaqui Grande property straddles a prominent copper-gold belt in the Sierra Madre Occidental in northwestern Mexico. The Suaqui Verde copper oxide deposit is situated immediately adjacent to the property and has surrendered exotic copper oxide mineralization. The mineralization has been identified about 100 metres from the Suaqui Grande property boundary.
Gold at Suaqui Grande occurs in an 8-km-long placer system centred on the property, and is associated with black magnetite-bearing sands, believed to be derived from the Suaqui porphyry-subvolcanic complex.
Intrepid plans a drilling program to test:
- An 8-sq.-km area of argillic-potassic hydrothermal zone, including an extensive tourmaline breccia complex;
- Several geochemical targets; and
- District-scale satellite anomalies with coincident magnetic anomalies
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