South America focused explorer Mariana Resources (AIM: MARL) had launched a joint venture with FTSE 250 silver miner Hochschild Mining (LSE: HOC) to jointly explore and develop the companies’ three gold and silver license areas in southern Argentina.
The tenements to be explored include Mariana’s Amigos I and Amigos II license areas and Hochschild’s San Augustin property, which are located in the Santa Cruz area in the western sector of the Deseado Massif, some 110 kilometres south of Hochschild’s producing gold and silver mine San Jose Mine.
The companies agreed to a US$2 million exploration budget within a three year period with Mariana covering 40% and Hochschild paying the remaining 60% for participating interests of 49% and 51% respectively. Hochschild will earn a further 9% of the JV if it funds 60% of the next US$3 million in the next two years and a further 10% by either completing a feasibility study or providing project financing, repaid out of Mariana’s 80% share of cash flow, giving it a total 70% interest.
IAMGOLD Corp (TSX: IMG; NYSE: IAG), which previously had a JV agreement over the San Augustin property with Hochschild, will retain a royalty interest of 1.5% of net smelter returns from any mineral produced from the properties.
“We believe that the project offers considerable opportunities, providing both companies access to a large consolidated target area where gold and silver mineralisation may extend across common property boundaries,” said Managing Director of Mariana Resources John Sutcliffe.
Targets at the project will be tested by preliminary drilling in 2010. Hochschild will operate the programme with technical and operational input from Mariana.
The area contains well developed NW and NNW structures hosting vein breccias; rock chip samples have previously returned anomalous precious metal values.
Hochschild is a major shareholder in Mariana, holding 10.53 percent as of June 30 2009. It invested US$1.5 million in Mariana last December, securing the right of first offer over Mariana’s portfolio of wholly owned properties and applications in Santa Cruz province.
Shares in Mariana rose more than 5% on the news.