Ecuadorian consolidates holding at Beroen

Arizona-based Ecuadorian Minerals (EMC-T) is adding to its land holdings in southern Ecuador.

The company has signed a letter-of-intent with Rio Tinto (RTP-N) to acquire Rio Tinto’s interests in the Beroen area, both wholly owned and in joint venture with Ecuadorian.

Ecuadorian has the option to purchase Rio Tinto’s Canoas and Canoas 1 concessions and its share of the Beroen joint venture for US$2.5 million in cash and shares over four years. The initial payment of US$100,000 in Ecuadorian shares will be made upon execution of the option agreement.

Ecuadorian must pay US$250,000 cash after one year, US$350,000 after two years, US$800,000 after three years and US$1 million after four years.

Rio Tinto would receive a 2% net smelter royalty upon commercial production.

The letter-of-intent is subject to regulatory approval, whereas the definitive option agreement will require the approval of both companies’ boards.

The two companies’ individual and combined efforts over the 20-sq.-km Beroen project area delineated an epithermal gold-silver system 1.8 km in length, 800 metres in width and spanning 1,000 vertical metres. Work to date has outlined high-grade, bonanza-style mineralization within veins, breccias, and silicified zones.

In 1997, drilling conducted by Rio Tinto on its wholly owned ground encountered 34.5 metres grading 12.3 grams gold per tonne in hole LLP-9 and 27 metres grading 10.4 grams gold in hole LLP-10. Other holes included LLP-8, which hit 55 metres from the surface grading 2.5 grams gold per tonne, and LLP-31, which hit 30 metres grading 1.2 grams gold. In all, Rio Tinto completed 6,000 metres of core drilling, along with extensive mapping and geochemical sampling.

Rio Tinto outlined 10 target areas on two concessions, and Ecuadorian has combined those data with its own work on the concessions immediately to the north.

Regarding the joint-ventured property, the Minerva zone, thought to represent the upper part of the epithermal system, and the adjacent Alejandra zone have the best potential for a high-grade discovery, Ecuadorian states in a release. The company notes that 65 grab samples from the zones returned an average value of 11 grams gold and 49 grams silver.

Rio Tinto never drill-tested Minerva and Alejandra because it was unable to obtain permits before it made the decision to sell. The drilling which was completed was done on the Penelope zone, just to the south of the Alejandra zone.

At the southern end of the hydrothermal system is a porphyry target in which 342 grab samples averaged 1.1 grams gold.

Drill targets on Ecuadorian’s wholly owned ground include the Loma Larga and Rio Blanco gold-silver targets, as well as the Miguir porphyry target.

Once the option agreement is signed, Ecuadorian plans to begin its own extensive exploration program, focusing on the undrilled Minerva-Alejandra zones.

In other news, Rio Tinto has commenced drilling at the El Acay porphyry target in Salta province, Argentina. The program of seven

reverse-circulation holes (totalling 2,000 metres) will test an area of strong hydrothermal alteration.

Rio Tinto can earn a 100% interest in El Acay over five years from Ecuadorian’s sister company, Aranlee Resources (arb-v).