TORONTO, ONTARIO--(Marketwired - Aug. 1, 2013) - Antofagasta Gold Inc. ("Antofagasta" or the "Company") (TSX VENTURE:AN) has entered into a Definitive Option Agreement to earn an 80% interest in the Atacama Copper Property ("Property"). The Property consists of approximately 293,500 hectares (2,935 square kilometers) in Chile's Antofagasta Region II, home to some of the world's largest copper mining operations and covering a large undrilled portion of the highly prospective Jurassic and Paleocene-Early Miocene copper porphyry belt.
The Property is located approximately 40 km north east from the city of Antofagasta, and is traversed by major highways, railways, desalination pipelines and high-tension power lines, some of which service existing operating copper mines in the region and are subject to easement agreements which will be assumed by the Company. The claim block follows the Antofagasta Calama Lineament covering roughly 120 km of the north south striking Chilean Copper Belt and is surrounded by several major producing copper mines. Operating mines within a 15 km radius of the Property boundary include Spence (BHP Billiton), Lomas Bayas (Glencore Xstrata), Mantos Blancos (Anglo American), Tesoro (Antofagasta Minerals/Marubeni) and Esperanza (Antofagasta Minerals/Marubeni). These mines currently account for over 600,000 tonnes of estimated annual copper production. A map showing the outline of the claim blocks and the location of the larger mines in the immediate area can be found here: http://media3.marketwire.com/docs/atacama_project.pdf.
William Randall (M.Sc., P.Geo), President & CEO of Antofagasta Gold, commented: "We are excited to commence exploration on a significant land package that is virtually unexplored, situated in the heart of the world's premier copper mining district. The location, size, scope and history of this exceptionally large property package make it a rare and unique opportunity, and significant event, for Antofagasta Gold and its shareholders."
Most of the copper porphyry deposits in the region belong to the Paleocene-Early Eocene world class Copper - Molybdenum porphyry belt which extends from southern Peru to northern Chile for a distance of over 1300 km. The Spence copper - molybdenum mine, one of the more recent major discoveries in the immediate region, is located 4 km west of the Atacama Copper property boundary. The property was discovered under 60 metres of gravel cover by Rio Algom in 1996 and is related to three Paleocene dacite porphyry intrusive and tourmaline breccias aligned north east - south west. Spence has a 20 m thick oxide zone followed by a well developed enrichment blanket averaging approximately 60 m in thickness. The deposit lies on the intersection of prominent north east and north west trending structural lineaments.
Vernon Arseneau (P.Geo), VP Exploration of Antofagasta Gold, commented: "It isn't often that geologists get the opportunity to explore such a large area that is both strategically located and has seen little to no previous metallic exploration work. The area was previously held by industrial minerals focused groups that did not explore for copper deposits. In some cases these claims have gone unexplored for base and precious metals since the late 1800's. Our team is already working in the area and we are ready to start exploration using our current field base and personnel. Compilation work has commenced will continue as the first phase of the work program in order to ensure a full data set for target selection and initial ground work."
Terms of the Agreement
Antofagasta has entered into a four year definitive option agreement to earn an 80% interest in the Atacama Copper project (the "Option Agreement"). To earn this interest, Antofagasta will be required to pay to the Vendor certain annual payments and complete certain minimum work commitment expenditures over a four year period on a per hectare basis as follows: (i) USD$1.00 per hectare on signing; (ii) USD$3.00 per hectare on July 26, 2014; (iii) USD$6.00 per hectare on July 26, 2015; (iv) USD$15.00 per hectare on July 26, 2016; and (v) USD$30.00 per hectare on July 26, 2017. The initial payment on signing has been made.
In addition, the Company has committed to incur exploration and development expenditures on the claims over the option term as follows: (i) USD$5.00 per hectare by July 26, 2014; (ii) USD$10.00 per hectare by July 26, 2015; (iii) USD$30.00 per hectare by July 26, 2016; and (iv) USD$60.00 per hectare by July 26, 2017.
The Company will be able to exercise the option on a maximum of 50,000 ha (500 square kilometers) at its discretion. The Company is not restricted in the selection of the area it chooses to retain, allowing it to retain the high priority targets it successfully identifies in the early stage exploration program. The terms of the agreement consist of total obligations that are not to exceed US$6.25 million over 48 months in work commitment in addition to a maximum cash payments totalling US$3,593,500. At all times during the term of the Option Agreement, the Company has the right to relinquish any parts of the Atacama Copper Property back to the Vendor with no further liability or payment obligations.
The Vendor will retain a 3% Net Smelter Royalty on all metallic minerals.
About Antofagasta Gold
Upon entering into a definitive option agreement regarding the Atacama Copper Property, Antofagasta Gold will have three properties under option covering approximately 326,000 hectares. All the properties are within the Antofagasta region of Chile, at low altitudes and within producing mining camps.
The Company currently has approximately $4,700,000 cash (as of March 31st, 2013). The remaining property payments for all properties held by Antofagasta Gold total $550,000 for the remainder of 2013. Total payments currently committed to for 2014 are expected to be $1,330,000 and remaining work commitments for 2013 & 2014 combined are expected to be approximately $1,545,000. The Pampas El Peñon and Atacama Copper option agreements allow for further reduction in land size, therefore reducing property payments and exploration commitments further, if necessary.
The technical and scientific aspects of this news release have been reviewed and approved by Mr. Vernon Arseneau, P.Geo, who has been designated as a qualified person pursuant to NI 43-101. As the Vice President of Exploration of the Company, Mr. Arseneau is not considered independent.
On behalf of the Board of Directors of Antofagasta Gold Inc
William Randall, President, and CEO
Cautionary Note Regarding Forward-Looking Information and Mineral Resources:
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements (express or implied) relating to the option agreement, the exploration and development of the Atacama Copper Property, the anticipated results relating to the exploration and development of the Atacama Copper Property, production results and/or the impact of such production results with respect to the timing, cost and/or amount of future exploration and development of any property, the timing, cost and/or amount of future production, the future price of gold, copper or other minerals, the successful implementation of development plans at any of the Company's properties and/or the future financial or operating performance of Antofagasta, its properties and/or its projects. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company, its properties and/or its projects to be materially different from those expressed or implied by such forward-looking information, including but not limited to those risks described in the annual information form of the Company, which is available under the profile of the Company on SEDAR. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. It should also be noted that mineral resources that are not mineral reserves do not have demonstrated economic viability.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contact Information:
(416) 309-2697
wrandall@antofagastagold.com