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Mr. Gary Freeman reports
INDICOSIGNS AGREEMENT TO ACQUIRE THE OCANA COPPER GOLD PORPHYRY PROJECT,SOUTHERN PERU; ANNOUNCES NON-BROKERED PRIVATE PLACEMENT FOR GROSSPROCEEDS UP TO $4,000,000
Indico Resources Ltd. has entered into an agreement with ManlioBassino Pinasco and Percy Samaniego Pimentel of Lima, Peru, whereinIndico has been granted the exclusive option to acquire a 100-per-centindirect interest in the Ocana copper-gold porphyry project insouth-central Peru. The Ocana property consists of 22 concessionscovering 110.24 square kilometres and is located on the northwestextension of the southern Peru porphyry copper belt, a trend defined inpart by the Toquepala, Quellavaca, Cuajone and Cerro Verde mines to thesoutheast. Recent exploration of the belt has resulted in discovery ofthe Zafranal copper porphyry deposit, located approximately 75 km to thesoutheast of the Ocana project.
Project details
The Ocana property targets an approximately 110-square-kilometre areawith widespread color alteration anomalies typical of large porphyrycopper-gold systems. Rock types, alteration and quartz veining on theproperty are consistent with the model.
Geology and target type
The southern Peru porphyry copper belt hosts the large porphyry copperdeposits of Toquepala (770 million tonnes at 0.74 per cent copper),Quellaveco (213 million tonnes at 0.94 per cent copper and 761 milliontonnes at 0.57 per cent copper), Cuajone (61 million tonnes at 0.56 percent copper and 1,212 million tonnes at 0.64 per cent copper), CerroVerde (one billion tonnes at 0.51 per cent copper) and Cerro Negro (64million tonnes at 0.56 per cent copper) as well as the newly discoveredZafranal porphyry system. The technical information with respect to theabove deposits was obtained through the respective companies' publicdisclosure documents and on SEDAR.
The Ocana project is underlain by Precambrian basement rocks intruded bymultiphase plutonic complex of the Coast batholith. These permissiveintrusive rocks are not identified on existing published geologic mapsand have been identified through field investigation.
Alteration consists of widespread proximal potassic (K-spar-magnetite)and silica alteration near the centre of the system grading outward tosodic-calcic (chlorite-epidote-calcite) propylitic alteration over aradial distance of four to eight km. Gold-bearing quartz veins in theperiphery of this new porphyry district are currently being mined byartisanal miners. The operating Arirahua gold mine is located sevenkilometres west of the project.
Planned work program
Indico intends to rapidly advance the property to the drill stage. Theexploration program will include detailed geological, structural andalteration mapping in tandem with detailed geochemical sampling andtrenching.
A ground magnetic survey is currently being designed to target observednorthwest-trending magnetite-bearing veins and silicified zones. Thiswill help identify structural fabric and map magnetic intrusions and/ormagnetite alteration. An induced polarization (IP) survey is alsoplanned to define zones of sulphide mineralization.
A budget of $3-million is proposed for year 1, which will take theproject from the surface exploration phase through to phase I drilling.
Terms of the agreement
The Ocana property is currently owned by three Peruvian companies:Minera Andina de Explorationes SAA, Mines Representaciones SAC and SMRLRosita No. 1 de Arequipa. Each of the owners has entered into a miningassignment and option agreement with Inversiones Minerales SAC grantingInversiones the exclusive the right to acquire a 100-per-cent interestin the Ocana property.
Pursuant to the agreement the vendors, being all of the shareholders ofInversiones, have granted Indico the exclusive option to acquire all ofthe issued and outstanding shares of Inversiones by Indico making, atits option, payments of escalating cash and shares over a five-yearperiod ending April 20, 2015. The total transfer price is $17.75-million(U.S.) and 8.5 million shares of Indico with the majority($15.49-million (U.S.) and 6.5 million shares) being payable in year 5.There are no exploration expenditure commitments, and no finders' feesare payable in connection with the transaction.
SCHEDULE OF PAYMENTSYear Cash SharesTSX-V approval $390,000Year 1 $310,000 200,000Year 2 $450,000 300,000Year 3 $520,000 500,000Year 4 $580,000 1,000,000Year 5 $15,500,000 6,500,000Total $17,750,000 8,500,000
Financing details
Indico announces its intention to complete a non-brokered privateplacement consisting of the issuance of up to 10 million units of Indicoat a price of 40 cents per unit, for gross proceeds of up to$4-million. Each unit will comprise one common share and one-half commonshare purchase warrant of Indico. Each whole warrant will entitle theholder to purchase one additional common share of Indico at a price of60 cents for a period of one year subject to Indico's right toaccelerate the exercise of the warrants if the closing price of Indico'sshares on the TSX Venture Exchange is equal to or exceeds $1 per sharefor a period of 20 consecutive trading days between four months and aday from date of issue of the warrants and the date of expiry of thewarrants.
The company has agreed to allocate a portion of the offering tosubscribers found by Axemen Resource Capital Ltd., an exempt marketdealer, and may agree to similar allocations to other exempt market orinvestment dealers. The company will pay finders' fees equal to 5 percent of subscription amounts received, payable in cash or units, plusissue finders' warrant exercisable into one common share of the companyat a price of 65 cents for 12 months from closing.
The proceeds of the private placement will be used to undertake theproposed work program on the property, initial payments to the vendorsand for general working capital purposes.
Conditions to closing
The closing of the transaction will be subject to, among others, the following conditions precedent:
- The completion of the private placement;
- The receipt of all necessary regulatory, corporate and third party approvals, including the approval of the TSX-V, and compliance with all applicable regulatory requirements and conditions in connection with the transaction;
- Other condition precedents customary for a transaction such as this transaction.
There can be no assurance that the transaction will be completed as proposed or at all.
Qualified person
EurGeol Keith J. Henderson, PGeo, Indico's chief scientific officer, adirector and a qualified person as defined by National Instrument43-101, has reviewed the scientific and technical information that formsthe basis for this news release. Mr. Henderson is not independent ofthe company as he is an officer and a shareholder.
We seek Safe Harbor.