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Australia-based Southern Hemisphere Mining (SUH) has signed a deal, which could result in Canadian mining firm Hudbay Minerals obtaining 70% of the Llahuin copper-gold project in Chile.

An option agreement has been signed by SUH’s subsidiary Minera Llahuin with Hudbay’s subsidiary HudBay Chile.

The deal will see SUH receive up to $5.8m in cash payments over five years from Hudbay Chile.

SUH chairman David Lenigas said: “This is an exceptional deal for the company. To have a major copper producer of Hudbay’s global standing farm-in to Llahuin is a big achievement for Southern Hemisphere Mining and we look forward to working closely with their corporate and in-country management teams as we strive to advance this very exciting project forward up the development curve.”

The option agreement also involves Hudbay Chile committing to spend a minimum of $3.5m on exploration over the first three years.

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By GlobalData
“The option agreement involves Hudbay Chile committing to spend a minimum of $3.5m on exploration over the first three years.”

A cash payment of $50,000 was paid by Hudbay Chile to Llahuin upon execution of the option agreement.

Llahuin is a highly prospective copper-gold project close to the city of Illapel in the Coquimbo Region, 250km north of Chilean capital Santiago.

Situated on the coastal cordillera at a moderate elevation of 1,300m, Llahuin is an advanced project with 55,700m of drilling in 188 RC holes and 59DDH holes.

According to the company, there is an opportunity to grow the Llahuin Resource. In this regard, the Cerro de Oro and Ferrocarril Zones have the potential to significantly increase the resource that is mostly from the Central Porphyry Zone at present.

The Llahuin project includes the Amapola exploration licences covering 1,372ha.