A Peruvian mining company has set its sights on a silver-gold property held by
Lima-based Mauricio Hochschild & Compania recently signed a preliminary agreement allowing it to earn a 51% interest in the 217,000-acre, El Pluma-Cerro Saavedra property by spending US$3 million over three years. It also agreed to make payments of US$200,000 upon signing of a formal agreement, and semi-annual payments totaling US$400,000 until production from a pilot plant begins.
The Peruvian company is expected to test the Huevos Verdes prospect, where Minera Andes previously discovered three zones of high-grade, silver-gold mineralization. EP-70, the best hole drilled to date, returned a 17.7-ft. interval grading 0.46 oz. gold and 47.7 oz. silver per ton.
Much of the drilling has been shallow, with the deepest hole extending to 490 ft. Data indicate that the vein system holds significant exploration potential at depth. The agreement calls for expenditures of at least US$100,000 per year on grassroots targets on the property.
Minera Andes expects Hochschild to begin drilling this fall. The work will consist of infill, deeper drilling and grassroots exploration. The information will be used to determine a resource for the deposit.
Once Hochschild completes the earn-in, it can construct a pilot plant that would process at least 50 tons per day. Minera Andes has the option of participating in development of the plant on a pro-rata basis, or retaining a 35% carried interest. If Hochschild chooses to proceed to production of a 500-ton-per-day operation, Minera Andes can participate on a pro-rata basis or see its carried interest fall to 15%.
The preliminary agreement is still subject to a 30-day due diligence review and approval by the Canadian Venture Exchange.
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