QRS Capital (QRS.V) announced in April they have signed a production agreement on the Aurum copper project in Chile.
Under this agreement, QRS will carry out the necessary exploration work to expand the currently existing resource estimate, and both parties will evaluate the possibility to exploit the shallow oxide resource through a heap leach operation.
QRS will take care of all costs regarding permitting and construction, and will in return get a management fee which will be equal to 10% of the EBITDA. The other 90% will be re-invested in the project and will be used to fund further exploration.
This production agreement is limited to the first 3.75 million tonnes at Aurum over a 5 year period.
The Aurum property is only 12 kilometers from Teck Resources’(TSE:TCK.B, NYSE:TCK) El Relincho copper-moly deposit which contained 1.1 billion tonnes at an average grade of 0.41% copper. The Aurum property has a historical resource estimate of 20 million tonnes at 1% copper (1993 Blue Ridge Resources estimate), and more recently, SRK outlined in 2006 a resource estimate of 5.5 million tonnes at a weighted average grade of approximately .6% copper.
QRS Capital can acquire 100% of the Aurum property by making cash payments of $8M, and incurring $12M in exploration expenditures over a 4 year period.
QRS is currently raising C$1M in a private placement priced at C$0.10/share to start the exploration program. The company expects to close the merger with Halo Resources (HLO.V) this summer, which should add approximately $1.5M to the treasury.
> Click here to read the press release
Disclosure: The author holds a long position in QRS Capital. Please see our disclaimer for current positions.
