Herencia Resources, the Chile focused mineral exploration and development company announced yesterday that it has executed a Binding Term Sheet to acquire the Pastizal copper project in central Chile via an option agreement. Under terms of the option agreement, Herencia will make four scheduled payments for a total of US$0.86m to acquire 100% of the project. In addition, a royalty of US$0.05 per pound of refined copper up to a total of four million tonnes of ore treated from Pastizal. The Binding Option Agreement provides for the option to be enforceable subject to Herencia completing its final due diligence. The Pastizal copper project is located adjacent to Herenica’s Picachos tenements and lies 10km from Teck Resource’s Carme de Andacollo copper-gold project. Results from recent geological mapping and surface sampling confirm that the high-grade mineralisation at Pastizal is a continuation of the 40M Shaft mineralisation where Herencia plans to develop an open pit operation.
Beaufort Securities view: We are encouraged with the option agreement to acquire the adjacent Pastizal project. While we are not aware of any historical drilling on the property, analysis of surface sample indicate high grade copper mineralisation and we note that there is currently small scale mining occurring at Pastizal. In addition, we see the acquisition as strategic fit for Herencia given the continuation of the 40M Shaft mineralisation as it continues with its plans to develop an open pit operation at Picachos. Whilst more detailed work is required in order to prove up any additional resources, we are encouraged with the preliminary surface results. These bode well for the company as it considers options for processing the Picachos ore through the recently proposed JV with the Errazuriz Group, which owns and operates the nearby Tambillos copper project. In the meantime, we maintain a Speculative Buy on the stock.
Beaufort Securities acts as corporate broker to Herencia Resources plc
