Prime Meridian Resources (TSXV: PMR) has formally entered into an option arrangement to acquire a 100% interest in the Cuatro Hermanos porphyry copper project, which is also referred to as the 4H Project. Located in Sonora, Mexico, the property currently boasts a historic resource with both copper and molybdenum mineralization.
Amount to 8,125 hectares of land, the project consists of ten concessions centered around a larger porphyry copper-molybdenum system. The system is currently measured to be at least four kilometres long by four kilometres wide and is said to have near-term production potential.
“The Cuatro Hermanos Copper Project is currently an 8-square kilometre, at-surface, copper and molybdenum system with near-term soluble copper (SXEW) production potential. The asset in its entirety versus the current value of PMR, represents tremendous leverage to rising copper and molybdenum prices which are beginning to reflect projected deficits in forward supply,” commented CEO Brian Leeners.
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Historic exploration work dates to at least 1969, when exploration was conducted by Occidental Petroleum. In subsequent years, Amoco, Cominco, BHP-Magma and Phelps Dodge have all conducted some level of exploration as well, which was said to be limited in overall extent. A firm by the name of Virgin Metals Inc in 2008 meanwhile had a now-historical resource estimate completed, with results as follows.
The project itself is said have at least seven known zones of mineralization, with the Main-Sulfate, Cactus, and West zones said to consist of known centers of a porphyry copper-molybdenum system. While the historical resource estimate is said to have copper mineralization between 0.18% to 0.20% in inferred and indicated resources across the project, regions of higher copper content are said to be found within the zones.
For instance, the Main zone is said to have a region where copper mineralization is said to average between 0.20% to 0.30% across a series of historical drill holes, while the Sulfate Zone is said to have a 20 to 30 metre thick zone of enrichment that features 0.50% to 1.00% copper.
Under the terms of the option agreement, the company will pay a collective $5.86 million in cash over a period of five years, while committing to spend $2.85 million in exploration on the project over that term, with the majority of payments to be made in the final year. Within the first twelve months, the company must pay $200,000, including $50,000 upon execution, while conducting $100,000 in exploratory work.
The vendor is to also retain a 1% net smelter return royalty on the project.
Subsequent financing & name change
At the same time, the company will be conducting a $1.0 million private placement, at a price of $0.05 per unit. Each unit is to contain one common share and one common share purchase warrant, with warrants valid for a period of three years and containing an exercise price of $0.10 per share. An acceleration clause also exists on the warrants, whereby the company can accelerate their expiry in the event the stock trades above $0.50 for a period of ten consecutive trading days.
Proceeds from the financing will be used for project payments and holding costs, along with exploration and working capital expenditures. A timeline to closing was not provided.
The company also indicated today that it intends to change its name to Sonoran Desert Copper Corp, and has reserved the ticker symbol SDCU in conjunction with the change. The name change remains subject to TSX Venture approval.
Prime Meridian Resources last traded at $0.06 on the TSX Venture.
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