Fidelity Minerals Corp (CVE:FMN) (FRA:S5GM) (OTCMKTS:SAIDF) said it is set to carry out a US$3 million exploration program at its core Las Huaquillas (CLH) precious and base metal property in Peru as it struck a deal to acquire a further 5.5% of the asset bringing its holding to 50%.
The company has inked a binding agreement with Alexander Ernesto Vidaurre Otayza and Lida Avelina Pimentel Jibaja over buying the further 5.5% in RIAL, which owns the project, for a total cash payment of US$500,000 in two instalments.
READ: Fidelity Minerals unveils encouraging sampling results from Las Brujas gold property, Peru
Fidelity Minerals will also fund underground sampling and exploration drilling worth up to US$3 million ahead of a new NI 43-101 technical report aimed at declaring inferred resources to be completed within 18 months following receipt of drilling permits. Planning for the work will begin immediately.
"The acquisition of this additional interest in the mineralized, world-class Las Huaquillas Project provides the company with a significant resource appraisal opportunity which we expect to immediately advance," Dean Pekeski, CEO of Fidelity said in a statement.
"Fidelity`s goal is to rapidly unlock value from Las Huaquillas, by completing meaningful, systematic exploration that we are confident the market will reward as we delineate substantial gold and copper resources. This will start with planning and permitting the drilling program and re-establishing the underground workings on the property so they can be accessed for metallurgical sampling. I believe that through successful exploration, Fidelity's value will be rerated in line with the valuations of larger peers with similar stage projects," he added.
Once the NI 43-101 is completed, the company will have earned a 50% ownership in the CLH project and RIAL so will enter into a joint venture, which will then aim to "define further exploration programs and other value accretive activities".
The CLH project was extensively explored up to 1999 but does not have a NI 43 101 compliant resource estimate. Previous work has included soil sampling, geophysics and 5,742.9 metres (m) of diamond drilling in 26 holes.
The most advanced of the previously recognized mineralized zones at the project, namely the Los Socavones zone, was partially appraised by Sulliden Exploration Inc in the 1990s.
Sulliden estimated that a 500m section of the 2,200m long Los Socavones structure hosted a historical near-surface geological resource of 6.57 million tonnes (Mt) grading 2.12 grams per ton (g/t) gold and 25.2 g/t silver, equivalent to 446,000 ounces of gold and 5.3 million ounces of silver at a 1 g/t gold cut-off.
This historical resource, based on 10 drill holes and 20 mineralized intercepts, was estimated to a depth of 200m.
Fidelity Minerals has a portfolio of high-quality mining assets in Peru, where it hopes to delineate major deposits to attract the interest of mid-tier and major mining companies. It has four key assets in Peru and is currently focused on progressing its two most advanced projects – Greater Las Huaquillas (GLH) and Las Brujas.
Contact the writer at giles@proactiveinvestors.com