Under the terms of the agreement, Azure would acquire full ownership of theAlacrán project by spending $5-million on exploration within the first four years of the agreement, as well as issuing 100 000 of its own shares to Teck on the signing of formal documentation, and a further 400 000 shares at the completion of the capital expenditure.
Azure would be required to spend a minimum of $2-million over the first two years, before being allowed to withdraw from the project.
Teck would retain the right to earn back a 51% interest in the project by sole-funding $10-million of expenditure, which would include a $500 000 cash reimbursement to Azure.
Furthermore, Grupo Mexico, the owner of the adjoining Cananea copper mine, would retain a 2% net smelter royalty over future mineral production from theAlacrán mine.
Azure told shareholders on Wednesday that the Alacrán property had only been lightly explored, and had the potential to host large porphyry copperdeposits and smaller higher-grade deposits.
“I would describe Alacrán as the best under-explored copper project in Mexico. Located in North America’s premier copper producing district, which stretches from northern Mexico into Arizona, this is one of the world’s great coppermining provinces and the Cananea-Alacrán district is right in the middle of it,” said Azure MD Tony Rovira.
“This acquisition adds another very exciting, high-quality asset to the Azure portfolio, and will allow us to continue to progress our copper-focusedexploration and development programme, while concurrently benefiting fromRio Tinto’s exploration of our Promontorio project.”
Under the terms of its agreement with Rio, the major’s subsidiary KennecottExploration had committed to sole-fund an initial $2-million over the next 12 months at Azure’s Promontoria copper project. The initial work would include airborne and ground geophysical surveys and sampling covering some 10 000 ha of the project area.
At the end of the 12-month period, Kennecott could elect to continue itsexploration for a further five years, spending a total of $20-million onexploration to earn a 51% stake in the project area.
