Australian mining giant BHP Minerals will join forces with Francisco Gold (VSE) on the Coahuila copper project in Mexico.
Exploration to date indicates the presence of a large, sedimentary-hosted copper-silver deposit measuring 30 to 40 ft. in thickness and grading 2% copper, plus more than 1 oz. silver.
BHP can acquire a 70% interest from the Mexican subsidiary of Goldeneye Explorations, a private British Columbia company. Francisco, in turn, is purchasing a 50.1% stake in Goldeneye for $2 million.
The joint-venture agreement calls for BHP to pay US$200,000 upon closing, as well spend a minimum of US$1 million in the first year. Cash payments will total US$5.3 million over five years, while property expenditures will amount to US$15 million.
After the fifth year, BHP will spend a minimum of US$5 million annually on a central block of claims totaling 380,000 acres; these expenditures will continue until the completion of a bankable feasibility study based on a minimum deposit size of 220 million tons.
BHP will earn the 70% interest after completing the required payments and placing the project into production within four years of finishing the feasibility. Goldeneye will retain a 30% carried interest.
The property area surrounding the 380,000-acre central block will be operated by Goldeneye. The company will spend US$3.5 million on the ground over the next five years and BHP retains the right to earn a 70% interest by reimbursing exploration costs exceeding US$3.5 million and bringing the property to production.
Francisco has 9.2 million shares outstanding and $7.2 million in working capital (before taking into account the $2-million payment to Goldeneye).
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