Vancouver – Mining giant Rio Tinto (RTP-N) has converted its letter of understanding with South American Gold and Copper (SAG-T) into a full option agreement on the junior’s Pimenton project in east-central Chile.
The major entered the picture earlier this year with an eye on testing the porphyry copper potential beneath South American Gold and Copper’s (SAG&C) small-scale gold mine, located in the Central Porphyry Copper Belt.
Rio Tinto can earn a 60% interest by meeting a 4-year schedule of expenditures and completing a feasibility study within seven years.
Since resuming operations in mid-2004, Pimenton produced limited amounts of gold from underground mining of narrow, mineralized veins. Operational issues have resulted in lower than anticipated mining rates with average gold output of just several hundred oz. monthly, along with some amounts of copper and silver. Also, recent heavy snowfall caused an avalanche risk at the mine, located in the high Andes, resulting in closure of road access to the operation and negatively effecting production.
Rio Tinto has drilled a few holes focused on the deeper porphyry copper target at Pimenton but no results have been reported.
SAG&C has 433 million shares outstanding and posts a $26 million market capitalization based on its recent 6 per share trading level.
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