Southern Hemisphere, FMR lock-in Chilean copper-gold JV

Southern Hemisphere Mining and FMR Resources have locked and loaded their earn-in joint venture across four concessions in the southern portion of Southern Hemisphere’s Llahuin copper-gold-molybdenum project in Chile, after FMR completed its technical due diligence.

The two firms revealed in June that FMR had signed a binding term sheet to earn up to 60 per cent of the southern concessions by funding a minimum $13 million in exploration and drilling over five years and two stages.

Upfront payments for the earn-in on the project, 350 kilometres north of Chile’s capital city of Santiago, comprise a total $2.67 million, which includes FMR issuing 937,500 shares valued at about $150,000 at the time of the disclosure and $2.52 million in cash.

FMR appointed experienced mining executive Oliver Kiddie, a geologist with 20 years’ experience, to come aboard as managing director and navigate its course across the Chilean project.

Kiddie previously held senior executive positions with Dominion Mining, Creasy Group and Legend Mining. He brings a track record of discoveries at the Silver Knight and Mawson nickel-copper-cobalt deposits.

FMR successfully completed a $2.2 million placement to support the transaction. Notably, billionaire prospector Mark Creasy has joined its register as a substantial shareholder.

Meanwhile, Southern Hemisphere retains all the project’s prospective northern concessions. It will also hold on to the company’s Ferrocarril deposit and Ferro South and Ferro West targets, in addition to its Cerro and Central ground.

Southern Hemisphere maintains a firm grip on all defined resources at the project site, consisting of a copper resource with 218.2 million tonnes grading 0.38 per cent copper equivalent for 496,600t of copper, 654,900 ounces of gold and 12,500t of molybdenum.

The resource, previously measured under 2004 JORC guidelines, now meets 2012 JORC-compliant guidelines.

With many thick intervals from surface or shallow depths, Southern Hemisphere feels it is in a tremendous position to bolster the resource with near-surface tonnes and provide for a potential open-pit operation at the project.

The company believes the agreement with FMR provides it with exposure to an aggressive and well-funded exploration program, with FMR planning deep drilling to target the Southern Porphyry copper-gold prospect later this year.

The promising Curiosity target is within the Southern Porphyry prospect and will form FMR’s primary area of interest among the concessions.

We are delighted to welcome FMR to the Llahuin copper-gold project and look forward to joint exploration success across the Southern Porphyry zone.

The completion of the Llahuin JV transaction is another important step as FMR embarks on phase one drilling of the exciting Southern Porphyry target area.

Southern Hemisphere has also completed a deep penetrating magneto-telluric (MT) geophysical survey at the potentially company-making Curiosity target.

It revealed a possible large copper-gold porphyry system below historic shallow copper porphyry-style mineralisation, providing FMR with plenty of work to keep it busy.

Curiosity is 550 metres below the previous Santa Maria gold workings and is about 1km in diameter and up to 2km deep.

The Curiosity target is supported by a soil geochemistry anomaly at surface and two shallow drill holes that produced drill intervals of 164m at 0.16 per cent copper equivalent from 2m and 106m running 0.13 per cent copper equivalent from 28m.

A 2m slice grading 1.45 per cent copper equivalent from 168m provides further encouragement to FMR that it may have plenty to work with.

The stage one earn-in initially requires FMR to spend a minimum $1 million on the concessions within the first year, including drilling at least one hole for a minimum of 1400m.

For FMR to earn a 50 per cent legal and beneficial interest in the agreed concessions, it must spend $3 million within the first two years, including a minimum 6000m drill program. When completed, a joint venture will be established to explore and mine all minerals within the agreed concessions.

Within 30 days of completing the stage one earn-in requirements, FMR may elect to earn an additional 10 per cent, bringing its stake to 60 per cent of the project’s southern concessions. To achieve this, FMR will pay Southern Hemisphere $2.5 million in cash or FMR shares at FMR’s election within 60 days and spend a further $10 million at the site over three years.

The JV earn-in agreement may well produce a win-win outcome for the two active mineral explorers.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au