Canada-based Westminster Resources has entered into a farm-in agreement with AusQuest for five copper licenses in the Ilo Sur project in Peru.
Through the farm-in agreement, AusQuest stands to acquire a stake of 65% in the licenses should it complete 13,000m of drilling over 7.5 years. The Australian exploration company will also have an option to acquire a stake of 75% upon completion of a pre-feasibility study (PFS).
There are a total of 36 copper licenses in the Ilo Sur project which are spread across 4,900 hectares.
Westminster Resources acquired the Ilo Sur project along with the Ilo Norte and Ilo Este projects from Latin Resources in February.
The five licenses involved in the deal are part of a 12,225ha project area located southwest of the Ilo Este Copper project.
AusQuest has licences near the Westminster licenses which were drilled in 2016. The transaction is expected to enable the Australian firm to continue exploring the area for a potential buried porphyry copper target.
According to Westminster Resources, the project area from a regional geological perspective is dominated by a Cretaceous-age diorite-granodiorite batholiths. It has coincident magnetic and radiometric anomalies adjacent to known structures, hosting various porphyry targets, said the Canadian mining exploration company.
Included in the farm-in agreement is an 18-month phase 1 program to identify drill targets and a 3-year phase 2 program to drill a minimum of 3,000m to earn an initial stake of 35%.
To earn a stake of 65%, AusQuest will also have to take up a 3-year phase 3 program of drilling an additional 10,000m or bear $2.5m of additional expenditure, whichever comes first.
For a stake of 75%, the company will have to take up a final Phase 4 PFS program as well to complete a pre-feasibility study. Once it earns 75% in the licenses, AusQuest can offer to acquire the remaining 25% stake of Westminster Resources for fair market value, as per the terms of the farm-in agreement.
Westminster Resources president and CEO Glen Indra said: “AusQuest is an active and well-funded explorer in the southern Peru region, and we welcome their involvement in our portfolio of projects.
“I’d like to thank Chris Gale, incoming director of Westminster, for his assistance in arranging this agreement, and look forward to AusQuest success, while Westminster focuses on its wholly-owned Ilo Norte and Ilo Este Copper Projects.”