Estrella Gold Corporation (TSX VENTURE:EST) has announced it has established an exploration Alliance with Cliffs Natural Resources Exploration Inc., to explore for Iron Oxide, Copper, Gold deposits in southern Peru.
The Term of the Alliance is for two years, commencing in early 2011. Estrella will be the Alliance Operator and will provide use of the Company's strategic Regional Andean Gold Exploration ("RAGE") Database. The RAGE database is a sophisticated GIS-based database with geological, geophysical, geochemical, and satellite imagery exploration data which specifically targets new mineral deposits. Cliffs will provide all funding with $400,000 per year for exploration programs. The Alliance has signed a Binding Term Sheet, which is subject to completion of a Formal Agreement within 60 days of November 20, 2010.
The Cliffs-Estrella Alliance will focus on the discovery of Iron Oxide, Copper, Gold deposits ("IOCG"), a class of polymetallic deposits present in Peru and Chile. The Alliance will focus on a specific area of interest, located at the northern end of the southern Peru IOCG terrain. Cliffs is highly experienced in the evaluation, development and operation of ferro-alloy metallic mines and is an ideal partner for IOCG exploration in Peru. Each new property will be held in a jointly owned company (50:50) and Cliffs will have an exclusive right to acquire up to 80 percent interest in each property. Prospective properties with a minimum of $50,000 in expenditures will be nominated to Cliffs as a "Property of Merit". Any Property of Merit accepted by Cliffs then becomes a Project for Continued Exploration ("Project") with Cliffs and Estrella each owning a 50 percent interest. Any Property of Merit which is declined by Cliffs shall become 100 percent owned by Estrella.
Cliffs can acquire an additional 20 percent interest in selected Projects, to a total 70 percent by spending a minimum of $4,000,000 and completing 3,000 meters of drilling within four years of selection. Cliffs will be required to expend a firm commitment of $500,000 and a minimum of $750,000 in the first year. 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 selected Projects 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 $2,000,000 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 convert to a two percent NSR royalty.
Keith Laskowski, President of Estrella, commented; "This is an ideal opportunity for Estrella and Cliffs; Cliffs is an industry-leading international mining and natural resources company, with an aggressive program to discover new IOCG deposits in Peru. Our team and our database will provide a quick start and efficient program. The Agreement provides Estrella and our shareholders with potential for significant rewards. Estrella looks forward to supporting Cliffs' strengths, and to a successful program."
Source: Estrella Gold Corporation