Junior picks up properties

Newcomer Cerro Dorado (CDCH-O) has signed a letter of intent to acquire a controlling stake in three gold properties in northern Chile from Fremont Gold (FGLD-O).

Financial pressures forced Fremont to seek a partner for the properties after a previous joint venture agreement fell through.

In September, Caledonian Pacific Minerals (CDM-V) terminated an agreement over the Cenizas, Milagro and Resguardo properties, leaving Fremont debt ridden and unable to pay its employees.

The company approved a plan to issue up to 25 million shares to cover US$770,000 of debt. It also began negotiations with other companies concerning its three main assets, reaching the conclusion that the sale of the properties was the proper course of action.

With only a minority interest in one mineral property remaining at the end of this deal, Fremont is considering its options for the future, including changing its focus away from the mining industry.

According to the recently signed agreement, Salt Lake City-based Cerro Dorado can purchase underlying options for the Cenizas copper-gold porphyry, Milagro gold property and the Resguardos gold property for 200,000 restricted shares of Cerro Dorado, plus US$25,000 in cash and a private placement for US$50,000.

Under the agreement, Cerro Dorado would be required to spend US$200,000 by December of this year, US$300,000 during 2000, US$500,000 in 2001 on exploration. The company must also make US$250,000 in cash payments to Rio Tinto (RTP-N) to earn 100% interest in the 13,000-ha property.

Previous work at Cenizas, situated in the southern part of the West Fissure, includes geochemical sampling, mapping, geophysics and limited shallow drilling. The West Fissure is a north-south trending structure in northern Chile that has focused the deposition of many of the world’s largest copper mines, including Chuquicamata, El Salvador, and Collohuasi.

To fulfill the year’s exploration commitment, Cerro Dorado plans to drill up to 4,000 metres of reverse circulation beginning in November. Early exploration has already outlined a number of targets in the large hydrothermal system. However, the company is talking with potential joint-venture partners to take over the work.

Cerro Dorado can assume Fremont’s option to earn an 80% interest in the 5,300-ha Resguardo by spending US$1.5 million.

The company can also earn Fremont’s 70% interest in the Milagro property.