Latin Resources (ASX: LRS) and TSX-listed First Quantum Minerals’ copper joint venture in Peru will remain on track after the duo’s subsidiaries inked an extended binding term sheet following delays in the permitting process, which resulted in drilling permitting approvals issued this week.
Latin’s wholly-owned subsidiary Peruvian Latin Resources secured the agreement extension with First Quantum’s 100%-owned subsidiary Minera Antares to proceed with the joint venture at Latin’s Pachamanca copper asset.
The extension follows two years of delays, with Latin reporting it had now received government approval to begin the drill permitting process.
Joint venture terms
Antares can potentially earn a majority 51% stake in Pachamanca (MT-03) by carrying out a geophysical survey and funding 4,000m of drilling within six months, in addition to technical studies underpinning a JORC resource estimate of about 1 million tonnes of contained copper equivalent.
If Antares wishes to secure 80% of the project, this can be achieved by provision of technical documentation and completed work supporting a decision to mine.
Latin is free-carried up to the decision to mine.
Antares then has an option to purchase Latin’s remaining 20% stake at a price set by an independent evaluation.
If this occurs, Latin will retain a 2% net smelter return royalty.
“The extension of terms granted by Antares (First Quantum) is a positive indication that they are very keen to start drilling on our MT-03 project,” Latin managing director Chris Gale said.
“Latin will be free-carried right through to a decision to mine – this means that our Peru operations are fully funded.”
Mr Gale said if Antares moved to mine the project, it would provide an “exceptionally bright future for Latin” either through a retained 20% participation or the 2% royalty.
“The approval from the government has taken considerable time, well over two years, however, we are now in a positive position to move forward with drilling of the project.”
Pachamanca copper project
According to Latin, Pachamanca is a large-scale target in an established copper region.
The project is along trend from Southern Copper’s Tia Maria deposit, which has a resource of 639Mt at 0.39% copper and 0.19 grams per tonne gold.
Latin noted there was also 125 billion pounds of contained copper in published reserves at several copper mines within 130km of the asset.