New World Resource Corp. ("New World" or the "Company") announces that it has entered into a letter of intent ("LOI") with Sociedad Contractual Minera El Tesoro ("the Owner") relating to the El Tesoro copper-gold project ("El Tesoro" or "the Project"), located approximately 250 kilometres ("km") north of Santiago and 35 km from the town of Illapel, in Region IV of Chile. Under the terms of the proposed transaction, New World will have the option to acquire up to 100% of the Project.
Project
El Tesoro is located within the Coastal Cordillera of Chile which contains numerous world-class mineral deposits. The Project is host to geological features similar to the archetype Candelaria iron-oxide-copper-gold ("IOCG") deposit, as well as the pre-feasibility stage El Espino IOCG deposit, which contains approximately 1.467 billion pounds of copper and 755,000 ounces of gold, and is owned by Sociedad Punta del Cobre (Pucobre). The El Espino deposit is located approximately 3.5 km to the south of El Tesoro. The mineralized system at El Tesoro includes a 1.8 x 1.5 km alteration zone with a strong potassic-altered centre and albite-silica halo. A near-surface meso-thermal vein system hosts gold, copper, and iron mineralization with an extensive history of artisanal mining activity.
El Tesoro covers an area of 320 hectares with year round road access, and rail and high-tension power within close proximity. The Illapel region has a long history of mining, with artisanal copper and gold mining continuing to the present day.
Company President & CEO, John Lando, commented: "This transaction will allow New World to initiate its new direction with a low-risk opportunity in a well-established mining-friendly jurisdiction rich in mineral resources. The El Tesoro project is positioned in an excellent location within a highly prospective geological setting."
Transaction Terms
Under the LOI, the parties have agreed to a 90-day exclusivity period to complete a due diligence and negotiate the terms of a definitive agreement. The agreement will provide for New World to make cash payments of US$600,000 to the Owner and incur US$1 million in exploration expenditures over two years, complete a Feasibility Study on the Project and make a cash payment to the Owner equal to US$0.50 per tonne of proven and probable reserves as defined in the Feasibility Study. Upon completion of the payments and exploration expenditures, New World will own 100% of the Project.
The Company may acquire 100% of the Project at any time during the first four years of the Option Agreement by electing to pay US$15 million to the Owner. The Owner will retain a 1% net smelter royalty ("NSR"), except in the case New World elects to acquire a 100% interest in the Project by paying US$15 million. In such case, the NSR will be subsequently increased from 1% to 1.5%.
The proposed transaction will be subject to certain conditions including the completion of proper due diligence and regulatory approval, including the approval of the TSX Venture Exchange.
Quality Control and Assurance
Exploration work on the El Tesoro project will be under the supervision of Brian McEwen, P.Geol., the Company's Chief Operating Officer, who is a "qualified person", as defined in NI 43-101, and is responsible for the preparation of the technical information contained in this news release.
Source: http://www.newworldresource.com/