Monto Minerals (ASX: MOO) has entered a partnership with Kagara (ASX: KGL) to investigate tin extraction and processing options at Baal Gammon and Monto’s Herberton Tin Project in Queensland.
Mine development at Herberton will begin immediately with ore processing targeted by October 2011.
Monto and Kagara have also signed an agreement giving Kagara the rights to mine the Baal Gammon Copper Deposit with considerations.
The considerations include $6 million as an initial capital payment to Monto payable in Kagara shares, 2.5% royalties payable on all metals for the 550,000 tonnes of ore processed and 2% royalties payable on all metals over the 550,000 mark.
The two mining companies will also form a joint venture for the exploration of base metals, excluding tin, across the entire Herberton tenement, with Kagara conducting the exploration activities.
Drilling at Herberton will begin in the coming months that may result in the increased profitability of Baal Gammon through the sale of tin in the production concentrate.
Historically, Herberton has produced over 109,000 tonnes of tin concentrates (concentrate comprising approximately 70% tin – 76,300t of tin metal) and is currently the pre-eminent area for hard rock tin exploration in Australia.
Several walk-up high grade drill targets have already been established at Herberton. A previous breccia pipe-hosted Vulcan mine was mined to a depth of 425 metres with a grade of over 6% tin for almost 14,000 tonnes of concentrate.
There is an extensive digitized database including air and ground-based magnetics, IP surveys, extensive soil sampling, rock chip sampling and drilling.
Baal Gammon is a highly advanced project incorporated into the Herberton tenements with a JORC Indicated and Inferred Resource of 5.482 million tonnes at 0.8% copper, 0.2% tin, 29 grams per tonne (g/t) silver and 29g/t indium.
Based on mine optimisations and open pit designs, Baal Gammon has a Probable Ore Reserve of 3.1 million tonnes at 0.95% Copper, 34.3 g/t silver, 29.6 g/t indium and 0.2% tin.
Herberton is located 70 kilomteres south west of Cairns in Far North Queensland and infrastructure in the immediate area is excellent with respect to sealed road access, power, workforce, suppliers and proximity to port.
The project comprises four granted exploration permits as well as 11 granted mining leases and 9 mining lease applications.