Canadian miner Vortex Metals has signed a non-binding letter of intent (LoI) with Chilean mining company SCM Ventana Minerals Group to purchase a stake of up to an 80% in the Illapel copper project in Commune of Illapel, Choapa province, Chile.

The Illapel copper-gold project is situated in a region with extensive mining activity. There are several small gold and copper mines operating in the immediate area.

The project has 8,000ha of prospective land, which is located next to the Rio 27 mine and processing plant.

It is claimed to have a ‘favourable’ geology that extends north and south from the mineralisation at Rio 27 mine.

Permits have been obtained for drilling and exploration, as high-priority targets have been identified.

As part of the LoI, Vortex will have the right to earn a 60% stake in the project by making cash payments of up to $1.3m, issuing 23 million shares and incurring $10m in exploration expenditures.

If the company agrees and exercises the option, it will have an option to acquire a further 20% stake, after completing a feasibility study on the project.

Ventana will be granted a 2.5% net smelter royalty (NSR) on the entire project, covering all mining claims subject to the effective date of the agreement.

In addition, Vortex can buy 0.5% of the NSR by paying $1.75m at any time from the deal’s effective date.

Vortex CEO and co-founder Vikas Ranjan said: “Vortex Metals is thrilled to announce the option to acquire a highly prospective exploration project, adjacent to, and extending from, an existing mining operation. Chile is the largest copper producer in the world, accounting for approximately 28% of global copper production.

“In our view, one of the best ways to make a discovery is to explore by an existing mine. We believe that with the Illapel Copper property, we will acquire an extremely prospective project that is drill-ready.”