The Exploradora North copper project is surrounded by multiple active copper mines operated by major companies in Northern Chile.
New Energy Metals (TSXV:ENRG,OTC Pink:NEMCF) has signed a letter of intent that gives it rights to acquire 70 percent of certain exploration and mineral concessions in the Exploradora North copper project in Northern Chile.
In a release on Friday (June 7), New Energy said that the letter of intent was signed with arm’s length vendors and the 70 percent interest is royalty free.
Exploradora North has an area of around 84,750 hectares and is located strategically between active well-known copper mines, such as BHP’s (ASX:BHP,LSE:BHP,NYSE:BHP) Escondida to the north and Codelco’s El Salvador to the south.
“The land positions of New Energy Metals are surrounded by most of the major copper corporations of the world,” said the company. It points in Friday’s release to recent positive results and ongoing exploration at neighboring operations.
“Exploradora North contains several porphyry copper system opportunities, some exhibiting lithocaps, possibly above a deeply concealed porphyry system; more than 50 percent of these prospects are covered with post-mineral gravel and volcanic rocks,” the release continues.
New Energy Metals plans to start drilling at the asset in August or September of this year after defining drill targets using deep-seeking induced polarization, metal earth magnetotellurics and magnetics.
According to the company, the nearby El Salvador project operated by Chilean state-owned company Codelco is comparable to Exploradora North.
“The original underground reserves at El Salvador, which began operation in 1959, were approximately 300 metric tons of 1.6 percent copper, mostly secondarily enriched ore.”
In 2018, the El Salvador mine produced 60,840 tonnes of copper.
To get its hands on the Exploradora North project, New Energy Metals will hand over US$8.5 million and issue 11.5 million common shares over 36 months in different stages. It will also have to spend at least US$15 million on exploration over 48 months.
The remaining 30 percent of the project will remain with the vendors, with which New Energy Metals will form a joint venture.
New Energy Metals has another project in Chile — the Cristal copper project in Northern Chile, which has had various development work done on it since the early 1990s by other companies.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.