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NSR royalty on 2 billion lbs Cu & 500,000 oz Au
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In February 2010, Tiomin Resources Inc. (‘Tiomin’), now
Vaaldiam, converted its 49% contributing equity interest
in the Pukaqaqa copper-gold project in Peru into cash
and, at production, additional cash payments and a Net
Smelter Return royalty ('NSR'). The property is located
approximately 400km SE of Lima in the province of
Huancavelica.
Peru hosts about 30% of the world’s copper
resources and is known for the large size of its
deposits. Pukaqaqa has the potential to grow
substantially and Compañia Mineral Milpo S.A. ('Milpo'),
will be significantly motivated to develop the project
now that it has 100% of the equity. The Pukaqaqa
deposit, excluding the Bella Sol resource (see below),
contains 2 billion pounds of copper and 500,000 ounces
of gold and has the potential to become a large scale
copper/gold producer.
Under the terms of the agreement with its joint
venture partner Milpo, Tiomin received US$7 million in
cash and Vaaldiam will receive a further US$4 million if
the project reaches commercial production and an
additional US$4 million one year later. In
addition, Vaaldiam receives a 1% NSR on all mineral
production from the current property package if the
quarterly LME copper price averages US$3/lb or less and
a 2% NSR above US$3/lb. The NSR also applies to any
properties subsequently acquired by Milpo within 15km of
the boundaries of the existing property package.
The Pukaqaqa deposit contains five zones of copper-gold
mineralization: Gaby Breccia, Monica Breccia, Blanket
Norte, Blanket Sur, and Raurac Breccia. The
Blanket Norte and the Blanket Sur zones are essentially
flat-lying mineralized skarn deposits that are flanked
to the east by the steeply dipping Gaby Breccia and
Monica Breccia zones and to the west by the Raurac
Breccia zone. The blankets are sub-horizontal and
contain irregularly disseminated copper mineralization.
The Breccias are composed of sulphide rich zones along
the steeping inclined to vertical portions of the
marble/intrusive contact.
Based on the
exploration data gathered, Milpo prepared a mineral
resources estimate using geological and resources
modeling features from MineSight. Met-Chem Canada
Inc. completed an independent audit of the resource and
a Technical Report in accordance with National
Instrument 43-101 standards in December 2007. The
mineral resources for the Blanket, Breccia and Raurac
have been estimated at 99,147,000 tonnes at 0.56% Cu in
the measured and indicated categories, using a cut-off
of 0.3% Cu and 58,662,000 tonnes at 0.60% Cu in the
inferred category.
In early 2008, Milpo acquired the Tinyaccla property
and its Bella Sol deposit from Buenaventura, located
within 3km of the main deposit at Pukaqaqa.
Buenaventura calculated a resource of 16 million tonnes
at 0.76% Cu and 0.17gpt Au (cut-off at 0.3% Cu) for the
Bella Sol deposit, located on the property. This
resource is not NI 43-101 compliant and is therefore not
included in the Pukaqaqa Mineral Resource mentioned
above. Milpo has delineated an exploration program for
the Bella Sol deposit and other targets on the
property.
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