Three diamond drill rigs have been mobilized to the Campo Morado project in Guerrero state, Mexico, as part of an $18-million exploration program initiated by Farallon Resources (VSE).
The company is well-funded for the program, having recently completed a $20-million special warrant issue. The placement included 3.2 million special warrants convertible into 3.2 million units at $6.25 each. A unit consists of one share and one warrant exercisable at $6.25 per share for one year.
The property covers 250 sq. miles and includes several turn-of-the century mines, as well as more than 20 known massive sulphide prospects. None of the prospects, however, has been explored or developed using modern methods.
The most advanced target, the Reforma deposit, represents a classic zoned, stratiform, overturned volcanogenic massive sulphide deposit.
In 1912, channel sampling from existing underground workings outlined a resource of 3 million tons grading 1.14% copper, 0.14 oz. gold and 7.2 oz.
silver per ton. The resource remains open at depth and along strike.
Farallon can earn a 100% interest in the property by issuing 750,000 shares and paying $1.2 million, in three stages, to Jan. 31, 1998. The company is also required to spend $2.4 million on the property and issue up to an additional 750,000 shares, based on a formula related to the project’s recoverable gold-equivalent ounces.
The ownership of the property, meanwhile, is being contested by Summex Mines (VSE), which claims to have an agreement to acquire an interest in the property from a party other than the group with which Farallon made its deal.
Farallon, which plans to proceed with its exploration plans, views Summex’s claims as unfounded and will fight the matter in court.
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