Drilling is under way on the Coahuila copper project in northeastern Mexico.
BHP Minerals is earning a 70% interest in the property from Goldeneye Explorations, a private British Columbia company, by paying US$5.3 million and funding a total of US$15 million in exploration expenditures over five years.
Francisco Gold (VSE) will buy a 50.1% interest in Goldeneye for about $1 million, which should be completed in September. Goldeneye is expected to complete an initial public offering some time next year.
BHP’s initial program on the Coahuila property will include about 20 diamond drill holes to test areas of known outcrops.
Francisco believes the property has potential for hosting a sizable, sedimentary-hosted, copper-silver deposit. Exploration to date, including trenching of outcrops, suggests the mineralized horizon measures 30-70 ft. in thickness, with a grade of 2% copper and more than 1 oz. silver per ton.
The horizon has been traced intermittently in outcrops for more than 100 miles. Preliminary leach tests returned recoveries in excess of 90%, and deeper mineralization may also be leachable.
The Coahuila property covers about 570,000 acres, and BHP has significantly increased the joint venture’s land possition.
Although there is some open-pit potential, the mineralized horizon is covered by considerable overburden (200 to 1,000 ft.) and any mine construction will likely take place underground.
BHP’s second phase of work will test selected targets with
reverse-circulation drilling to test for the grade and thickness of the copper mineralization.
Francisco has 9.2 million shares outstanding, or about 13 million on a fully diluted basis (including 2.7 million $3.85-warrants and 800,000 $1.75-warrants).
With $7 million in working capital and all its properties farmed out, the company is looking for new projects.