Australia-based exploration company Mining Group has reached a production agreement over the El Roble project in Chile, allowing the company to access the Panga copper mine.
The Panga mine is located approximately 4km north-east of the Descubridora and Veta Gruesa mines, on the mineralised structure known as Panga.
The production agreement gives Mining Group the exclusive rights to extract 5,000t of ore from the historic Panga mine, subject to several conditions.
Mining Group has to make a monthly payment of $2,000 and the first $200,000 of revenue generated from the operation would also be subject to a 10% royalty.
Every subsequent dollar of revenue over the $200,000 per month limit would be subject to a 5% royalty and royalty payments would be made in lieu of the minimum monthly payment when royalty payments exceed $2,000/m, with Mining Group being held liable for the minimum monthly payments from January next year.
Mining Group MD Zeffron Reeves said that the production agreement marked a significant milestone for the company in moving forward to achieve its short-term goal of starting small-scale production at El Roble.
"The Panga mine has been historically mined with a number of small stopes mapped from underground and numerous workings mapped at surface along its 3km strike extent.
"This agreement gives us access to 1,100m of strike, where there is around 220m of adit development and open ore faces exposed at the bottom of the mine," Reeves added.
Mining Group believes that Panga, which is one of the major primary copper ore bearing structures at El Roble, exhibits elevated gold grades in comparison to other parts of the project area.
In addition, the company said that the immediate mine area had the potential to host numerous high-grade copper and gold-bearing ore shoots.
"Now we have exclusive access to Panga, we will commit resources to fully assessing the area.
"This will include a small drill programme targeting below the mined-out historic stopes, which will assist the company in delineating economic widths of high-grade copper mineralisation and making a decision on whether the start of small-scale mining at Panga is a feasible option," Reeves concluded.
In near future, Mining Group intends to conduct more detailed geology and engineering studies at Panga with a view to making a decision on mining early in 2014.
Image: Panga mine is located approximately 4km north east of the Descubridora and Veta Gruesa mines. Photo: Courtesy of Mining Group.