Jan 5 2011
Focus Ventures Ltd. (TSX-V: FCV.V) has announced that it has signed the Definitive Agreement with Peruvian miner, Compañia de Minas Buenaventura (NYSE: BVN), which has optioned Focus's 100%-owned Minas Chanca silver property.
Under the terms of the Agreement, Buenaventura can earn a 75% interest in the claims by spending US$3 million in exploration and development over a period of three and a half years, of which $1 million is committed to be spent within the first 18 months. The work program during the option period will include no less than 3,000m of diamond drilling.
Once Buenaventura vests its 75%, a joint venture company will be formed (NEWCO). Buenaventura will have the option to acquire Focus's 25% participating interest by paying Focus $4.00 /oz Ag based on resources outlined in a NI 43-101 compliant technical report, or $4 million in cash, whichever is the greater. If Buenaventura chooses not to purchase Focus's 25% share of NEWCO, Focus will have the option to have Buenaventura provide financing, with repayments to be made through dividends in NEWCO, or alternatively Focus can choose its own financing. A 2% Net Smelter Royalty will be payable to Focus on future production, subject to a buy-out clause of $1 million.
David Cass, President of Focus, commented "We are pleased to have concluded the agreement with Buenaventura, whose operational capabilities and nearby infrastructure will be significant in advancing the Minas Chancas project quickly through the exploration phase and if successful, to production. Should Buenaventura vest its 75% share in the Project, our 25% interest will be non-dilutable, and unless purchased outright by cash or based on resources outlined as a result of exploration, Focus will be financed through to production."
Raul Benavides, Vice President Business Development for Buenaventura, comments: "Buenaventura is pleased to have Focus as partners at Minas Chancas and looks forward to our association with the Focus team for the successful development of the property going forward."
Background
The property comprises 1,200 hectares acquired by Focus in 2009 by direct staking, and two adjacent claims covering an additional 1,000 hectares subsequently acquired by Buenaventura and included in the Agreement. The former Ag-Pb-Zn mine is located midway between the provinces of Oyon and Cajatambo, some 160km north of the Peruvian capital, Lima, at altitudes of 4,400 - 4,900 m a.s.l. Minas Chanca is located 65km north of Focus's recently acquired Santa Rosa property (see Press Release November 30, 2010).
References to mining at Minas Chanca date back to 1712 during Colonial times. Past mining took place over approximately 300 vertical meters via a system of galleries, cross-cuts and drives that exploited a number of veins and splays that cross-cut lower Calipuy andesites and volcanic breccias. The majority of silver-lead and zinc ore came from 3 principal veins, Candelaria, Tarazca and Santo Toribio, where early production reportedly yielded grades of 50 to 75 oz Ag/t. Other veins included the Prescilda, Shirley and Yanacelli veins.
The underground workings are currently inaccessible, and Buenaventura's work program will test for depth and strike extensions to the mined veins and explore for new mineralized structures. Work will comprise access to site, rehabilitation and sampling of underground adits, tunneling, geological mapping, sampling and drilling.
Any success in delineating future resources at Minas Chanca will have operational synergies with Buenaventura's existing mining operations and projects close to the property, notably the Uchucchacua Ag Mine 20km south-east, and the Mallay project, located 10km to the south.