Mines Management Inc announce it has signed a letter of intent with Estrella Gold Corp for an option to acquire up to 75% of the La Estrella gold and silver project located in central Peru approximately 230 kilometers southeast of Lima.
The La Estrella property contains approximately 2,500 hectares of land within the Central Peru polymetallic belt located 130 kilometers south of Huancayo in the Department of Huancavelica a region with a history of silver mining dating to the 1500. The Project is in an area of established infrastructure with roads and electricity and lies within 30 kilometers of Minera Buenaventura historic Julcani Silver Mine which began operation in 1955. EGC has established and maintained constructive community agreements with all stakeholder communities and the property is already fully permitted for additional drilling.
Mr Glenn M Dobbs President and CEO said "The La Estrella exploration project represents Mines Management's step into one of the most prolific silver and gold regions in the world. The Project is in a favorable district, and possesses a number of very positive attributes including previous exploration success and a permitted drilling program which may afford us the ability to move forward expeditiously. We look forward with enthusiasm to the prospect of working with EGC on the project."
The terms of the LOI allow MGN through its subsidiary, Minera Montanore Peru, SAC to earn 75% of the La Estrella project by expending USD 5 million over four years on exploration activities. Option payments would include USD 50,000 due upon signing of the definitive agreements which will supersede the LOI, USD 100,000 upon the first anniversary of such signing and USD 200,000 annually thereafter until completion of the earn-in. Work expenditures would include USD 500,000 in the first year including 2,500 meters of drilling, USD 500,000 in the second year, including 2,500 meters of drilling and completion of a preliminary economic assessment on a defined resource on the property.
Mines Management, Inc minimum outlay includes USD 50,000 due upon signing, and USD 350,000 of the first year work commitment for a total of USD 400,000. If MGN elects to exercise the option by completing all option payments and expenditures, EGC would retain a 25% interest carried to production. The LOI allows MGN to conduct a period of additional exclusive due diligence until March 1 2012 during which time definitive agreements are expected to be negotiated and executed.
La Estrella is an advanced exploration stage project which contains an epithermal, volcanic hosted gold-silver system with associated base-metal mineralization extending over a strike length of at least 1,200 meters. Previous exploration on the property included surface sampling, 22 diamond drill holes and 11 reverse circulation drill holes where all but two holes encountered gold and silver mineralization.
Two different styles of mineralization are present within a 1,200 meter north-south by 200 meter east-west zone, which remains open for expansion. The largest area of mineralization occurs as a north-south trending, west dipping, irregular, stratabound zone measuring 50 meters to 150 meters in thickness, where gold and silver mineralization of low to moderate grade has been intersected along strike for 600 meters, remaining open to the north, south and west. The second type of gold and silver mineralization occurs in north and northeast trending, sub-vertical fault zones which cross-cut the stratabound zone with mineralization of higher grade.
