Estrella Gold Corporation (TSX VENTURE:EST) has announced it has signed a Formal Agreement with Cliffs Natural Resources Exploration Inc. establishing an exploration alliance to explore for Iron Oxide Copper Gold deposits in southern Peru.
Cliffs Natural Resources Exploration Inc. (NYSE:CLF) ("Cliffs"), is an international mining and natural resources company. The term of the Alliance is two years, commencing on February 9, 2011 (see prior news release) and provides for subsequent exploration of new properties acquired within the Alliance.
Estrella will be the operator of the Alliance and Cliffs will provide all funding with $400,000 per year for regional exploration. The Cliffs-Estrella Alliance will focus on the discovery of Iron Oxide Copper Gold deposits ("IOCG"), a type of deposits present in Peru and Chile. 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% 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% interest. Any Property of Merit which is declined by Cliffs shall become 100% owned by Estrella.
Cliffs can acquire an additional 20% interest in selected Projects, to a total 70% 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. Cliffs can acquire an additional 10% interest to a total 80% 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% interest. If Cliffs elects not to earn an additional 10% 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 10%, that interest will be convert to a 2% NSR royalty. The Agreement also provides Cliffs with the option to acquire up to an 80% interest in the Company's Pampa Poroma property, subject to the same terms described above, except Cliffs must spend a minimum of $2,000,000 within two years to earn its initial 50% interest.
Source: Cliffs Natural Resources