Lundin Mining Corporation (“Lundin Mining” or the “Company”) is pleased to announce that it has entered into a purchase option agreement (the “Option Agreement”) to acquire an 80% interest in the Touro copper project located in northern Spain (the “Project”) owned by two private Spanish companies (the “Vendors”). The Option Agreement gives Lundin Mining an exclusive option (the “Option”) until October 1, 2012, subject to extension, to purchase an 80% interest in the Project, pending satisfactory completion of due diligence, including confirmatory and step-out drilling and other technical work currently being conducted by the Company.
The Option Agreement provides that:
Lundin Mining may earn an 80% interest in the Project by paying Euro €60 million (the “Purchase Price”), payable as follows:
Euro €10 million on the exercise of the Option
Euro €30 million when Lundin Mining makes a construction decision, subject to adjustment if the construction decision extends past 18 months from Option exercise
Euro €20 million on the start of commercial production
Upon the exercise of the Option, Lundin Mining and the underlying owners will form a new joint venture company which will own all of the assets of the Project, of which Lundin Mining will be an 80% shareholder and Operator of the Project
Upon a decision to construct, Lundin Mining will fund 100% of the Project costs, with those costs repayable preferentially with interest from surplus operating cash flows before other distributions
Lundin Mining will be granted options to purchase additional lands owned by one of the Vendors should such lands be required for the Project.
Mr. Paul Conibear, President and CEO of the Company, commented, “We are very pleased with the signing of the Option Agreement on the Touro copper project in northern Spain. We believe the project has the potential to be rapidly advanced and we are well on our way to making a decision on the option, having mobilized several drill rigs onto the property earlier this year. In addition to easy access to known mineral resources exposed in three pre-existing open pits, much of the copper mineralization within the Touro property is nearly flat lying, at or near surface. The project also benefits from significant modern, local and regional infrastructure in Galicia, an autonomous community with a rich mining heritage and pro-business attitude. We look forward to continuing to work with our partners to advance the project to the next stage."
The Touro Project
The Touro Project consists of 205 mining claims encompassing 57.4 square kilometers, and is located in La Coruña province of the Galicia region, in northwest Spain. Copper-gold mineralization is characterized by strongly disseminated to semi-massive and rarely massive sulphides comprised of a simple, coarse-grained assemblage of pyrrhotite, an iron sulphide, and chalcopyrite, a copper-iron sulphide, locally associated with some gold. The copper-gold mineralization is hosted within a generally shallow dipping layered succession of metamorphic rocks, the mineralized layers commonly ranging between 10 metres and 60 metres thick and known to exist close to surface over several square kilometres across the Touro property.
The Touro Project was previously fragmented into two separately owned parts, the core property formerly known as the Arinteiro Mine with a 6,500 tpd concentrator that was operated during the 1970’s and early 1980’s by Atlantic Copper and a surrounding,contiguous exploration property, held during this period by Peñarroya.Open pit copper mining ceased in 1986 due to depressed copper prices,and a large construction company related to one of the Vendors acquired the properties and have operated it as an aggregate business for many years. Uniquely, this property has not received any exploration or mineral resource study work since copper operations were closed. Lundin Mining believes the opportunity exists to define and expand a significant mineral resource at Touro. Recently, initiatives by the underlying Vendors has enabled consolidation of disparate mineral and surface access rights into a cohesive land and mineral license package consisting of at least 7 mineralized zones which are all open to resource expansion by step-out exploration drilling.
A historical resource estimate, non-compliant to National Instrument 43-101 (“NI 43-101”), of 196 million tonnes grading 0.39% Cu, based upon a cut-off grade of 0.2% Cu, exists for the Project. Lundin Mining has initiated a drill program consisting of both confirmatory and step-out drilling focussed on both copper and gold potential with the intention of preparing a NI 43-101 compliant resource estimate as soon as practicable. Metallurgical test work and preliminary technical studies are being conducted in parallel to drilling to support a decision regarding the Option.
Source: Lundin Mining