Indico Signs Binding MOU on the Maria Reyna Property
October 17 2012 - 6:34PM
Marketwired Canada
Indico Resources Ltd. ("Indico" or the "Company") (TSX VENTURE:IDI)(OTCQX:IDIFF)
is pleased to announce the signing of a binding Memorandum of Understanding
("MOU") with the Peruvian owners of Cia Minera Maria Reyna S.A. of Lima, Peru
(the "Vendors") wherein Indico will acquire an indirect 51% interest and further
be granted an exclusive option to acquire the remaining indirect interest in the
Maria Reyna Co-Mo porphyry project in southern Peru. The project consists of a
3164 hectare group of mining titles located in the Andahuaylas-Yauri Belt of
skarn-porphyry deposits in Cusco Region, Southern Peru, 100km south of Cusco and
within 10km of Hudbay's Constancia Cu-Mo-Ag project (ex Norsemont sold to Hudbay
in Q2 2011 for $520 million) which is currently under construction (Figure 1).
The Maria Reyna concession block covers at least three significant
skarn+/-porphyry systems along 10 kilometres of a northeast-trending structure.
Mineralization is related to the regionally significant Andahuaylas batholith
and later subvolcanic intrusions. This igneous suite has intruded extensive
marine sedimentary rocks of the Yura Group, which in the project area are mainly
complexly folded carbonate rocks. Skarn Cu-Mo+/-Au mineralization is common
along the contact zones, and porphyry mineralization occurs within and adjacent
to some of the subvolcanic dacitic intrusions. The same geology is present at
several significant deposits in the Belt, including the Las Bambas
skarn-porphyry cluster (1.7 billion tonnes of 0.60% Cu), Haquira (690 million
tonnes at 0.59% Cu), and the Constancia porphyry deposit (reserves of 450
million tonnes at 0.36% Cu), located only 10 kilometres southeast of Maria
Reyna.
In 2010, following geophysical and geochemical surveys consisting of 433 rock
and 165 soil samples covering a little less than a third of the property, Vale
completed 11 diamond drill holes (5585 metres), targeting skarn and porphyry
mineralization at the Southwest Zone (Figure 2 and 3). The drilling intersected
both high-grade, shallow Cu-Mo skarn and breccia mineralization, and low-grade
disseminated porphyry mineralization beneath. Intercepts greater than 0.2% and
0.3% Cu are summarized below in Table 1 and 2. Highlighted in the tables are
intersections of shallow mineralization with grades greater than 0.4% CuEq,
which will be targeted by future in-fill drilling to generate a near-surface
resource. The Company cautions that it has not had the chance to fully verify
the quality and accuracy of the relevant historic sampling and drilling results
reported in this news release. The historic figures were generated from sources
believed to be reliable, based on limited review of the drill core and outcrops
in the field, but they have not been confirmed by a Qualified Person, as defined
by NI-43-101.
Table 1: Vale Drill Intersections at 0.2% CuEq(i) Cut-off.
--------------------------------------------------------------------
Ag Cu Mo CuEq
Hole_ID from to (ppm) (ppm) (ppm) % Interval
--------------------------------------------------------------------
DH-001 206 256 1.5 1956 113 0.27 50
--------------------------------------------------------------------
DH-002 0 136 4.1 5251 78 0.61 136
--------------------------------------------------------------------
DH-003 226 256 1.7 2365 122 0.31 30
DH-003 460 480 0.3 1871 62 0.22 20
--------------------------------------------------------------------
DH-004 10 240 3.0 2616 124 0.35 230
DH-004 336 486 1.5 1839 147 0.27 150
DH-004 502 522 0.8 1914 87 0.24 20
--------------------------------------------------------------------
DH-005 10 76 4.8 6277 122 0.74 66
--------------------------------------------------------------------
DH-006 0 114 4.0 3179 112 0.41 114
--------------------------------------------------------------------
DH-007 0 106 2.5 3882 267 0.55 106
DH-007 176 216 1.7 2546 280 0.41 40
DH-007 232 310 1.0 1657 272 0.31 78
--------------------------------------------------------------------
DH-008 256 394 1.4 2764 130 0.36 138
DH-008 432 519.85 1.7 2345 209 0.36 87.85
--------------------------------------------------------------------
DH-009 18 90 1.7 2815 335 0.47 72
DH-009 110 172 0.7 1358 184 0.24 62
DH-009 196 256 0.9 1793 106 0.24 60
--------------------------------------------------------------------
DH-010 262 314 1.7 3036 204 0.42 52
DH-010 344 406 2.1 3429 641 0.68 62
--------------------------------------------------------------------
DH-011 18 178 2.9 4970 998 1.03 160
DH-011 374 406 1.1 1448 175 0.24 32
--------------------------------------------------------------------
Intervals were calculated with maximum of 10m of 0.1% CuEq internal
dilution, 0.2% CuEq edge grade, minimum length of 15m. For CuEq calculations
the following variables were used: $3.00/lb Cu, $15.00/lb Mo, $21.00/oz Ag;
no allowances for metallurgical recoveries were made.
Table 2: Vale Drill Intersections at 0.3% CuEq(i) Cut-off.
--------------------------------------------------------------------
Ag Cu Mo CuEq
Hole_ID from to (ppm) (ppm) (ppm) % Interval
--------------------------------------------------------------------
DH-001 222 246 1.8 2442 141 0.33 24
--------------------------------------------------------------------
DH-002 0 62 4.5 5789 63 0.66 62
DH-002 74 136 4.3 5510 103 0.65 62
--------------------------------------------------------------------
DH-003 232 254 1.7 2504 130 0.33 22
--------------------------------------------------------------------
DH-004 10 62 7.2 5122 56 0.61 52
DH-004 108 142 1.7 1663 380 0.37 34
DH-004 364 408 2.4 2547 169 0.36 44
--------------------------------------------------------------------
DH-005 10 74 5.0 6455 116 0.75 64
--------------------------------------------------------------------
DH-006 0 24 7.9 5501 265 0.76 24
DH-006 56 78 4.8 5551 93 0.65 22
--------------------------------------------------------------------
DH-007 2 102 2.6 4002 282 0.57 100
DH-007 176 212 2.0 2670 304 0.44 36
DH-007 244 290 1.2 1962 335 0.38 46
--------------------------------------------------------------------
DH-008 270 296 3.1 5162 193 0.64 26
DH-008 322 344 2.0 3435 238 0.48 22
DH-008 438 482 2.0 2632 286 0.43 44
DH-008 504 519.85 2.9 3389 133 0.43 15.85
--------------------------------------------------------------------
DH-009 18 76 2.0 3153 371 0.52 58
--------------------------------------------------------------------
DH-010 262 314 1.7 3036 204 0.42 52
DH-010 344 406 2.1 3429 641 0.68 62
--------------------------------------------------------------------
DH-011 20 82 1.4 2153 328 0.39 62
DH-011 98 178 4.6 8025 1711 1.71 80
--------------------------------------------------------------------
Intervals were calculated with maximum of 10m of 0.1% CuEq internal
dilution, 0.2% CuEq edge grade, minimum length of 15m. For CuEq calculations
the following variables were used: $3.00/lb Cu, $15.00/lb Mo, $21.00/oz Ag;
no allowances for metallurgical recoveries were made.
The most significant intercept was in DH-011, which intersected 80m of 1.71%
CuEq (0.80% Cu, 1711 ppm Mo), at a 0.3% CuEq cutoff, hosted by hydrothermal
breccia. This interval has an upper Cu-rich and a lower Mo-rich segment, in
which the matrix of the breccia is filled with semi-massive chalcopyrite and
molybdenite, respectively. The mineralization is constrained by adjacent hole
DH-001 to dip northeast, and is open along strike to the northwest and
southeast.
During a core review, where all significant mineralized intervals were inspected
with assays in hand, it was noted that the northeast-directed holes were not
optimally oriented, and most stockwork veins are nearly parallel with the core.
This is in agreement with surface measurement of structures found on Vale
geology maps. Consequently, subsequent infill drilling will be directed mainly
to the southwest, with an expected improvement in continuity of mineralization.
The Northeast Zone, lying one kilometre to the northeast of the Southwest Zone,
was not drilled or mapped by Vale. A greater than 1 kilometre in diameter
Cu-Mo-Au rock and soil anomaly there suggests a significant adjacent mineralized
system. Geophysical evidence suggests the anomaly is underlain by an intrusion.
Informal mine workings along the northwest peripheries of the area indicate
there is skarn mineralization, and future mapping will delineate any related
porphyry mineralization.
Another 4 kilometres to the north lies the North Skarn, an area of extensive
informal workings and relict trenches from a Phelps Dodge's work program in the
90's. Garnet-skarn with abundant copper oxide and carbonate occurs at the
contact of dacite porphyry and marble, with several structurally controlled
zones over an area of about 300 X 500 metres. This area was not covered by
Vale's geophysical and geochemical surveys and mineralization remains to be
outlined.
Terms of the MOU
The Property is currently owned by Compania Minera Maria Reyna S.A. ("Reyna").
Pursuant to the MOU, the Vendors have agreed to sell to Indico 51% of the issued
and outstanding shares of Reyna (the "Purchase Shares") for the sum of US$2M
which sum is payable no later than that date being 4 months following the
closing of the Transaction (the "Closing").
In addition the Vendors have granted to Indico the exclusive option (the
"Option") to acquire all of the remaining issued and outstanding shares of Reyna
by Indico making, at its option, payments of escalating shares and one cash
payment over a 5 year period. The total option price is US$20M and 30M shares of
Indico with the majority ($10M and 20M shares) being payable in year 5. In the
event Indico does not exercise the Option it will transfer back to the Vendors
the Purchase Shares.
Upon exercising the Option, Indico will grant to the Vendors collectively a 1%
NSR Royalty.
There are no exploration expenditure commitments and no finder's fee are payable
in connection with the Transaction. At Closing the parties will enter into a
shareholder's agreement that will provide for certain matters regarding the
management of Reyna. The Transaction is arm's length.
The schedule of payments is as follows:
----------------------------------------------------------------------------
Date Shares Cash
----------------------------------------------------------------------------
On the date Indico receives its first drilling
permit for the Property (the "Drilling Date") 1,000,000
----------------------------------------------------------------------------
6 months after the Drilling Date 1,000,000
----------------------------------------------------------------------------
12 months after the Drilling Date 2,000,000
----------------------------------------------------------------------------
18 months after the Drilling Date 2,000,000
----------------------------------------------------------------------------
24 months after the Drilling Date 2,000,000
----------------------------------------------------------------------------
30 months after the Drilling Date 2,000,000
----------------------------------------------------------------------------
36 months after the Drilling Date 5,000,000
----------------------------------------------------------------------------
48 months after the Drilling Date 5,000,000
----------------------------------------------------------------------------
60 months after the Drilling Date 10,000,000 US$20,000,000
----------------------------------------------------------------------------
Conditions to Closing
The closing of the Transaction will be subject to, among others, the following
conditions precedent:
1. the receipt of all necessary regulatory, corporate and third party
approvals, including the approval of the TSX-V, and compliance with all
applicable regulatory requirements and conditions in connection with the
Transaction;
2. other condition precedents customary for a transaction such as the
Transaction including the completion and execution of a formal share
purchase and option agreement; and
3. the completion by Indico of a private placement within 120 days of
signing date of the MOU being 17th October 2012.
There can be no assurance that the Transaction will be completed as proposed or
at all.
Ocana Cu-Mo-Au Porphyry Project, Southern Peru
Indico's planned Phase 2 drilling program at Ocana has commenced, with two holes
competed. The program involving a minimum of 4400m will further delimit the
southern and eastern edges of both primary and supergene mineralization. It will
consist of shallow holes (200m or less) along the southern ridge to test
primarily for supergene sulphide and oxide mineralization, and infill drilling
to test the upper higher-grade zones within the primary breccia target. The
drill hole spacing will be roughly 200 metres. With Phase 2 completed, Indico
should have sufficient data to estimate Inferred resources at Ocana.
To view Figures 1-3, click on the following link:
http://media3.marketwire.com/docs/i1017m.pdf
About Indico Resources Ltd.
Indico Resources Ltd. is a resource exploration company focused in the discovery
and exploration of porphyry copper-gold deposits in South America. The Ocana
Porphyry Project is the Company's primary exploration project and is currently
the main focus of exploration activities. In addition, the Company has reviewed
multiple additional porphyry exploration projects and is in negotiation to
acquire interests in additional porphyry exploration projects. Please visit our
website at www.indicoresources.com.
The technical information provided in this news release was reviewed and
approved by Robert. W. Baxter (FAusIMM), a director of the Company and a
qualified person for the purposes of National Instrument 43-101.
On behalf of Indico Resources Ltd.
Robert Baxter, President and Chief Executive Officer
Cautionary Statement Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of
the United States Private Securities Litigation Reform Act of 1995 and "forward
looking information" within the meaning of the British Columbia Securities Act
and the Alberta Securities Act. Specifically, there can be no assurance that the
Transaction will be completed as proposed. Generally, the words "expect",
"intend", "estimate", "will" and similar expressions identify forward-looking
information. By their very nature, forward-looking statements are subject to
known and unknown risks and uncertainties that may cause our actual results,
performance or achievements, or that of our industry, to differ materially from
those expressed or implied in any of our forward looking information. Statements
in this press release regarding Indico's business or proposed business, which
are not historical facts, are forward-looking information that involve risks and
uncertainties, such as estimates and statements that describe Indico's future
plans, objectives or goals, including words to the effect that Indico or
management expects a stated condition or result to occur. Since forward-looking
statements address events and conditions, by their very nature, they involve
inherent risks and uncertainties. Actual results in each case could differ
materially from those currently anticipated in such statements. Investors are
cautioned not to place undue reliance on forward-looking statements, which speak
only as of the date they are made. All of the Company's Canadian public
disclosure filings may be accessed via www.sedar.com and readers are urged to
review these materials, including the technical reports filed with respect to
the Company's mineral properties. The foregoing commentary is based on the
beliefs, expectations and opinions of management on the date the statements are
made. The Company disclaims any intention or obligation to update or revise
forward-looking information, whether as a result of new information, future
events or otherwise.
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