Australian mining company SolGold has acquired a 20 per cent stake in the Ecuadorian subsidiary of a company which owns copper and gold projects in the north of the country.
The AIM-listed mining company renegotiated a deal enabling it to buy an initial 20% holding in Exploraciones Novomining S.A (ENSA), a wholly-owned Ecuadorian subsidiary of Cornerstone Capital Resources, which owns the Cascabel copper gold porphyry and the La Encucijada porphyry and epithermal gold projects in Northern Ecuador.
Porphyry is the technical term used to describe solidified volcanic lava which has other elements visibly suspended in it. It is one of the most important sources of precious metals such as gold, silver, copper and tin.
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The position of the Cascabel copper gold project is in the Andean Cordillera, a chain of volcanic mountains forming part of the longest continental mountain range in the world.
Under the terms of Solgold's renegotiated earn-in agreement, it has the right to acquire up to 85% of ENSA by completing equity placements totalling approximately $1.2m in Cornerstone and completing a 2,500m drill programme at Cascabel, which it said was scheduled to begin around May 2013.
The total expenditure commitment for the earn-in phase was reduced to approximately $2.5m from a previous commitment of $7.8m, the company reported.
Nick Mather, SolGold Executive Director, said: "SolGold remains fully committed to the Cascabel project in Ecuador with Cornerstone. Recently announced exploration results provide considerable encouragement that the 25 square kilometre intrusive system at Cascabel will yield at least one major porphyry copper gold discovery.
"The company is particularly encouraged by open-ended high grade copper and gold vein zones at Quebrada Alpala. The permitting processes are progressing well under Cornerstone's Ecuadorian management, and SolGold is optimistic that drilling will commence in or around May 2013."
He added: "The opportunity to renegotiate with Cornerstone provides SolGold with immediate equity of 20% in ENSA, considerably lower expenditure commitments of approximately $2.5m as compared to approximately $7.8m previously, higher ultimate equity of 85% and increased flexibility for expenditure programs and schedules."
Cornerstone Capital Resources focuses on generating and advancing mining projects that have potential for discovery.
SolGold's share price was unchanged at 2.62p at 12:51 on Tuesday.
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