Metallic Minerals Corp. is pleased to announce that it has entered into an option agreement to acquire a 100% interest in the La Plata silver-gold-copper property in southwest Colorado from two private vendors.
The road accessible property covers 32.7 square kilometers (km2) approximately 26 kilometers northwest of Durango, Colorado within the historic high-grade La Plata mining district (the “District”) located at the southern end of the prolific Colorado Mineral Belt. The La Plata property hosts a large-scale precious-metals-rich porphyry system with associated high-grade silver and gold epithermal deposits.
The La Plata district has a long and rich history of mining with the first silver deposits discovered in the 1700s by Spanish explorers. High-grade silver and gold production has been documented from the 1870s through the early 1940s from vein structures, replacement bodies and breccia zones at over 90 individual mines and prospects. From the 1950s to 1970s, major miners Rio Tinto, Exxon and Freeport-McMoRan explored in the District focusing on the significant potential for bulk-tonnage disseminated and stockwork porphyry-hosted copper mineralization.
During this period of exploration, 49 holes were drilled on the Property, totaling 12,700 meters. Drill holes and trenches confirmed the presence of a large-scale, multi-phase, precious-metals-rich alkalic copper porphyry system grading up to 1% copper with significant silver and other precious metals. Covering at least 3 km by 1 km the porphyry system is exposed over 1 km of vertical relief and remains open to expansion. This large-scale system centers on a 10 km2 magnetic anomaly and is highlighted by an intense hydrothermal alteration signature. Surrounding the porphyry system is an associated high-grade silver and gold-rich epithermal system measuring at least 8 km by 2 km that hosts 56 identified vein, replacement and breccia structures. Historical production from some of these high-grade structures exceeded 500 grams per tonne (“g/t”) silver and over 30 g/t gold with some of the richest deposits exceeding several hundred ounces per ton gold and over a thousand ounces per ton silver.
Within the porphyry system several higher-grade areas have been identified with the largest at the Allard target area, measuring approximately 1 km long by 200 m wide, and a second at the Copper Age target that is 500 m by 200 m. Both targets remain open to expansion at depth and along strike. One of the deepest holes drilled on the Property intersected 378 m of porphyry style mineralization grading 0.62% copper equivalent (0.52% Cu, 6.2 g/t Ag, and 0.06 g/t Au) including 110 m grading 0.82% copper equivalent (0.64% Cu, 7.4 g/t Ag and 0.13 g/t Au) with the hole ending in mineralization. Only a limited number of holes were analyzed at the time for silver, gold and platinum group metals. However, samples from within the porphyry system indicate potential for significant additional value from silver and other precious metals with select samples returning multi-gram values of gold, platinum and palladium.
Greg Johnson, President and CEO of Metallic Minerals, stated, “We are very excited to add the La Plata property in southwestern Colorado to our portfolio of high-quality silver and gold properties that include our flagship Keno silver, McKay Hill silver and Klondike gold properties in the Yukon. Geologically the La Plata system has many similarities to the precious-metals-rich Galore Creek porphyry system owned by Newmont and Teck in British Columbia’s “Golden Triangle”. We believe the Metallic Minerals team is uniquely suited to take on this compelling exploration opportunity at La Plata based on the experience of its key members who are credited with the major resource expansion of the Galore Creek deposits following their acquisition from Rio Tinto in the early 2000s. Our team also brings additional specific expertise in high-grade, structurally controlled silver and gold deposits both in the region and from exploration in the high-grade Keno Hill silver district.”
Mr. Johnson continued, “The La Plata property has been privately held with almost no modern exploration in over 50 years on either the large-scale porphyry system or the surrounding high-grade epithermal zones, both of which will be a focus for Metallic Minerals. We are initiating on-site exploration to collect geologic, geochemical and geophysical information covering this historic brownfields district, including synthesis of past exploration and mining information to systematically refine future targets for drilling. We believe that systematic exploration at the La Plata property has the potential to not only rapidly enhance the size of the known historic mineral resources but to identify and expand the higher-grade zones within the broader porphyry and epithermal mineralized systems.”
Under the terms of the agreement, Metallic Minerals has an option to acquire a 100% interest in the Property by paying to each vendor 5 million units and US$250,000 upon the achievement of certain milestones over a 4-year period. The Property will be subject to a 1% net smelter returns royalty in favor of each vendor, which may be reduced to 0.75% for each Vendor upon payment of a total of US$500,000.
Each of the foregoing units will comprise one common share and one-half of a share purchase warrant. Each full warrant will be exercisable for the purchase of one common share for a period of 36 months from issuance at an exercise price equal to 120% of the 20-day volume weighted average trading price of the common shares on the TSX Venture Exchange (the "TSXV") on the business day immediately preceding the date of issuance. At Metallic Minerals’ election, the expiry time of the warrants may be accelerated to 30 business days if the closing price for the common shares on the TSXV is greater than 150% of the applicable warrant exercise price for 10 consecutive trading days.
Closing of the acquisition is subject to customary closing conditions, including final acceptance by the TSXV.