Indico, Aruntani to jointly develop Ocana project
2015-05-01 09:08 ET - News Release
Mr. Robert Baxter reports
INDICO ENTERS INTO PRIVATE PLACEMENT AND PARTNERSHIP WITH ARUNTANI S.A.C. FOR DEVELOPMENT OF THE OCANA PROJECT
Indico Resources Ltd. has entered into an interim agreement with Aruntani SAC with respect to the development of the Ocana copper project, located in the Arequipa region of Peru.
Pursuant to the terms of the Agreement, Indico and Aruntani have agreed to jointly develop the Ocana project (the "Partnership"). Under the terms of the Partnership, Aruntani will own 70% of the Ocana Project after completion of expenditures totaling US$18.6 Million, with Indico owning the remaining 30%. The Partnership will immediately work to develop the leachable copper resource at Ocana with the aim of constructing a 25 Mtpa SX-EW plant. Immediate plans will include additional drilling to expand the leachable copper resources and conduct metallurgical testing to complete a PEA on the leachable copper project.
Robert Baxter, Indico's CEO and President, comments: "We are extremely pleased to have Aruntani agree to the terms of a partnership with Indico Resources to develop the Ocana Cu-Au-Mo project. Aruntani is wholly-owned by long term Peruvian mining industry participant, Mr. Guido Del Castillo."
Mr. Del Castillo has more than 35 years' experience in open pit and underground mining operations and is a prominent and highly respected personality in Peruvian mining. He began his long and illustrious career in mineral engineering having graduated from the Escuela Nacional Ingenieros in Lima followed by graduate studies at the Colorado School of Mines. Mr. Del Castillo is currently President and CEO of Aruntani and President of MDH S.A.C. and Bradley-MDH S.A.C., a joint venture with Bradley Brothers of Rouyn-Noranda of Quebec, Canada.
The Agreement is intended to serve as a basis for the definitive agreement and the formation of the Partnership is subject to a number of customary conditions precedent, and the approval of the TSX Venture Exchange and all other required regulatory, corporate and security holder approvals as may be required.
As part of the Agreement, Aruntani will acquire 40,000,000 units of Indico at a price of $0.075 per unit for gross proceeds of CAD$3 million. Each Unit will be comprised of a share and one-half of a warrant, each whole warrant being exercisable for an additional share at a price of $0.10 per share for a period of 24 months from closing (the "Private Placement"). Proceeds will be used to make property payments which were due to be paid on the 20th of April 2015. Pollitt and Co. of Toronto, Canada, will be paid an advisory fee in connection with the transaction. As a result of the Private Placement, Aruntani will own approximately 28.5% of the issued shares of Indico and approximately 37.5% presuming exercise of the Private Placement warrants.
The Agreement and the Private Placement are subject to TSX Venture Exchange approval as well as shareholder approval of the new insider and control person of the Company as a result of the Private Placement. The Company intends to obtain shareholder approval by way of consent resolution.
The Ocana Property consists of 23 concessions covering 123 km2 and is located on the northwest extension of the Southern Peru Porphyry Copper Belt, a trend defined in part by the Toquepala, Quellaveco, Cuajone, and Cerro Verde Mines to the southeast. Most recent exploration of the belt has resulted in discovery of the Zafranal copper-porphyry deposit, located approximately 75 km to the southeast of the Ocana Property. Indico has diamond-drilled a total of 9903 metres in 57 holes at Ocana.
In July 2014, Indico announced the maiden independent resource estimate for the supergene portion of Ocana. The Technical Report is available for review on the SEDAR website at www.sedar.com under "Company Profiles - Indico Resources Ltd." and on the Company's website at www.indicoresources.com. Table 1 lists the estimated resources following Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") classification definitions at the cut-off grade of 0.1% recoverable (acid and cyanide soluble) copper. The recoverable copper cut-off, using sequential copper leach analysis, is used because it reflects a more conservative estimate of economically extractable material.
Table 1. Ocana Supergene Resources at 0.1% Recoverable Copper Cut-off
------------------------------------------------------------ Classification Millions of Tonnes Total Cu % ------------------------------------------------------------ Indicated 13.7 0.46 ------------------------------------------------------------ Inferred 36.1 0.34 ------------------------------------------------------------
Highlights of the mineral resource estimate are:
-- Indicated mineral resource of 139 million pounds (63,000 tonnes) of total copper grading 0.46% Cu
-- Inferred mineral resource 270 million pounds (122,000 tonnes) of total copper grading 0.34% Cu
-- Supergene mineralization remains open to the south and east
Significant hypogene (primary sulphide) mineralization underlies the shallow supergene mineralization at Ocana, with intersections of greater than 0.2% copper occurring over 800 metres east-west, and 600 metres north-south. Mineralization continues to the north onto the neighbouring property, and this year was drilled by Pembrook Mining Corp. as part of their Pecoy project.
As the mineralization remains open to the east, four additional long holes (400 metres each) and eleven additional short (100-150 metres) holes are currently planned to test the eastern limits of the hypogene and supergene mineralization, respectively; these will total about 3000 metres. One of the best supergene intercepts from the last drill programme is from this area: hole OCA13-27 with 31.5 metres of 0.70% total copper, and 0.63% recoverable copper.
Once the above drilling is complete, Indico intends to complete an updated supergene resource estimate and Preliminary Economic Assessment for a 15,000 - 25,000 tpd, heap-leach, SX/EW operation, producing copper cathode at site.
Qualified Person
John Drobe, P.Geo., Indico's Chief Operating Officer and a qualified person as defined by National Instrument 43-101, has approved the scientific and technical disclosure in the news release. Mr. Drobe is not independent of the Company, as he is an officer.
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