Dec 2 2010
Harmony Gold Corp. (TSX VENTURE:H) announces that it has entered into a option agreement, subject to regulatory approval, with ECI Exploration and Mining Inc. to acquire up to a 70% interest in ECI's Purisima Project located in the state of Nayarit, in west-central Mexico.
ECI's Mexican subsidiary, Minera Electrum, S.A. de C.V., wholly controls the mining property, including two Exploration and Transfer Promise Agreements. The Purisima Project covers a total area of 21,515 hectares in 14 concessions, located 30 km north east from the city of Tepic, towards the SW border of the geological Province of Sierra Madre in west central Mexico.
Terms of the Options
In consideration for the Company's acquisition of the Option (the "Option") and exclusive right to acquire an initial undivided 51% interest in the Properties, Harmony will pay ECI One Hundred Thousand Dollars ($100,000) within 5 business days of receipt of TSX Venture Exchange ("Exchange") approval of the Transaction (the "Acceptance Date").
The completion of the Transaction is subject to a number of conditions including, but not limited to, Exchange approval.
Harmony may exercise the initial Option by: (a) making the option payment described above; (b) incurring $750,000 in exploration expenditures on the Purisima Properties, a minimum of 3,000m of drilling on or before 12 months from the Acceptance Date, an additional $1,000,000 in exploration expenditures on or before 24 months from the Acceptance Date, a final $1,500,000 in exploration expenditures on or before 36 months from the Acceptance Date; (c) issuing 1,000,000 common shares in the capital of Harmony ("Harmony Shares") to ECI within 5 business days of the Acceptance Date, issuing 2,000,000 common shares in the capital of Harmony Shares to ECI no later than 24 months from the Acceptance Date, issuing 3,000,000 common shares in the capital of Harmony Shares to ECI no later than 36 months from the Acceptance Date.
Harmony, if fully exercises the above initial Option, shall have the 90 days in which to notify ECI of its intention to enter into the Second Option. Under the terms of the Second Option, Harmony shall have the right to earn an additional 19% in the Property (a total of 70%) by completing a bankable feasibility study.
ECI shall operate and manage exploration whilst Harmony is exercising the Option terms described above and while ECI maintains at least a 50% interest in the Purisima property. ECI shall be paid a 10% management fee for this service.
The Purisima Project
The Purisima Project is located 30 km northeast from the city of Tepic, towards the SW border of the geological Province of Sierra Madre in west central Mexico in the mining district of La Purísima. The La Purísima district is located in a major mining region hosted in the southernmost sector of the Western Sierra Madre, towards the border of the sub province of the Serranías Sepultadas and shares many of the same tectonic-geologic features of this province. It is also very close to the Tran Mexican Volcanic Belt. There are many mineralized sites in this part of Mexico, including the Mining Region of Hostotipaquillo which is home to a series of historic places i.e. Gran Cabrera, Monte El Favor, San Pedro Analco and Cinco Minas that are notable not only for their size and production but also for their bonanza-type ore grades. Another important project in the region is the Orion project, which is currently at prefeasibility stage.
The Purisima project consists of 21,515 hectares in 14 concessions. Purisima's original discovery dates back to colonial times. Exploration and mining activities on the deposit began in the early 1900's and continued intermittently until the 1960's. Production records are incomplete, but indicate that some of the ore shipped during this period had average grades of 12.9 g/t Au and 296 g/t Ag.
Although the deposit has a long-lived history, modern exploration of the area has been minimal: Only 40% of the length exhibiting continuous exposure has been partially explored while only 15% of the length has been evaluated in detail. Minera Electrum conducted the most recent exploration program in the area in late 2008 and 2009. Minera Electrum geologists mapped the geology in the immediate area of interest at a scale of 1:2000, collected 668 surface geochemical samples, and generated targets using Aster imagery clay mapping. This work generated three exploration targets. Minera Electrum drill tested only one of these targets with five diamond drill holes totaling 1,348 meters. The drilling program succeeded at confirming continuity of vein-hosted gold and silver mineralization and grades both laterally and at depth consistent with that ore mined historically in mine workings within the primary target. The drilling covers an area 350 meters along strike, and 200 meters along dip of the primary vein. Drill holes were spaced at approximately 50 meters for four holes, and the fifth hole was stepped-out 300 meters to the southeast of existing historical mine workings.
The mineral deposits of the Purisima Project are low sulfidation type epithermal quartz-breccia vein deposits with bonanza grade Au-Ag mineralization. Mineralized structures occur along the length of regional scale structures and are associated genetically to the agglutinated rhyolitic dome systems in the region. The main mineralized structure in the area is the Veta Purísima (Purisima Vein) and appears as an extensive outcrop of white quartz, over 5 m wide. Minera Electrum's exploration programs in 2008-2009 and subsequent data compilation confirms a strike length of at least 1.2 km for the structure, but mapping of intermittent outcrops suggest that the vein continues for 4 km along its strike. The primary minerals within the veins include native silver, argentite, native gold, gold-bearing pyrite and traces of galena, chalcopyrite and sphalerite; secondary minerals include malachite and manganese oxides; gangue minerals include quartz, calcite mainly with some content of adularia. Epithermal veins are associated with intense silicification and potassic alteration, moderate argillization and oxidation of the wallrock.
The mineralized shoots in the Veta Purisima zone coincide with areas of structural dilatation. The 2008 drilling on the gold-silver mineralized shoot has demonstrated a strike length of at least 200 m, and a possible overall strike length of 500 meters in the shoot's main part. True widths of the vein as indicated from the drilling are as much as 14.5 meters. Current drilling indicates that thickness of the vein may increase considerably at-depth. This target remains open to expansion on all ends.
Potential remains for additional discovery of gold-silver mineralization at-depth and laterally along the Veta Purísima structure, particularly in the extreme western sector where assay results have reported up to 25 g/t Au in DDH-EPP-5 (step out diamond drill hole) that indicates the potential of a at-depth connection of these two mineralized areas.
Additional potential on the project includes the other targets generated by surface mapping, sampling and the interpretation of mineral alteration via Aster imagery. This work identified a number of other sub-parallel structures (i.e. Veta Agua Zarca) with alteration (alunite and illite) related to rhyolite dikes and areas of silicification suggesting epithermal mineralization similar to the known mineralized zone at Purisima.
Mr. William Burnett, CPG, of Yukuskokon Professional Services, LLC., is a qualified person as defined by NI 43-101, and has reviewed and approved the information contained in this release.