Dec 7 2010
Estrella Gold Corporation (TSX VENTURE:EST) has announced the establishment of a Joint Venture with Cliffs Natural Resources Exploration Inc. for the exploration and potential development of the Company's Pampa Poroma Iron Oxide Copper Gold project in Peru.
The Pampa Poroma IOCG project is located 22 km south of Nazca, Peru, in the Department of Ica. The Pampa Poroma property is located approximately 20 km northeast from the Marcona-Mina Justa Iron Oxide Copper Gold district which contains at least three major IOCG deposits. The Marcona, Mina Justa and Pampa de Pongo deposits each contain between 750 thousand to 1.4 billion tonnes of iron-copper-gold reserves or resources. The Pampa Poroma property contains 900 hectares of mineral claims located over prospective alteration and mineralization. Estrella owns a 100% interest in the claims subject to the Mining Law of Peru. The Companies have signed a Binding Term Sheet, which is subject to completion of a Formal Agreement within 60 days of November 20, 2010.
Under the terms of the Joint Venture agreement Cliffs can earn an initial 50 percent interest in the Pampa Poroma project by making exploration expenditures of $2 million within 2 years, including a minimum of $750,000 during year one with a firm commitment of $500,000. Estrella will operate the Venture until such time that Cliffs elects to take over as operator. Cliffs must spend an additional $4 million within 4 years of earning its 50 percent interest, to earn an additional 20 percent, to a total 70 percent interest. If Cliffs fails to earn a 70 percent interest, the property will revert back to Estrella (100%) subject to Estrella granting an NSR royalty to Cliffs, based on the amount of expenditures Cliffs has made on the property. If Cliffs has spent a minimum of $1,000,000 but less than $3,000,000 they will receive a 0.5 percent NSR royalty. If Cliffs has spent more than $3,000,000 but less than $4,000,000 they will receive a 1.0 percent NSR royalty.
Cliffs can acquire an additional 10 percent interest to a total 80 percent in Pampa Poroma, by completing a NI 43-101 Compliant Pre-Feasibility Study or by defining a compliant Mineral Resource containing a minimum of 1,000,000, ounces of gold or gold equivalent, within four years of earning its 70 percent interest. If Cliffs elects not to earn an additional 10 percent interest, Cliffs will pay Estrella $2 million within 60 days and the parties will fund their proportional interest, subject to conventional dilution. If either Party's interest is reduced to a 10 percent, that interest will be converted to a 2 percent NSR royalty.
Keith Laskowski, President of Estrella commented "We are very excited about this opportunity to work with Cliffs Natural Resources Exploration Inc., a leading exploration and mining company focused on Iron Oxide Copper Gold Deposits. We look forward to helping them achieve their goal of finding the next major IOCG deposit in Peru."
Source: Estrella Gold Corporation