Mundo Minerals Limited
(ASX: MUN)
ASX/MEDIA
RELEASE
25
MARCH 2008
Mundo Minerals Expands and Enhances Asset Base in Brazil
HIGHLIGHTS
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New joint venture announced at Nova Prata,
near existing Tocantins JV tenements.
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Significant geochemical anomaly at Nova Prata
provides strong initial exploration target.
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Option to acquire advanced Jaqueira Gold
Project in Bahia State,
north-eastern Brazil
(Jacobina gold belt).
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Due diligence sampling confirms strong correlation to grades encountered
from previous mining operations.
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Numerous exploration targets identified, enabling rapid assessment of
project potential.
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Acquisition terms and consideration linked to exploration success.
Mundo Minerals Limited (ASX: MUN)
is pleased to advise that it has completed negotiations on two new gold
projects in Brazil to
complement its existing asset base in South America.
Both projects have the potential to enhance its existing pipeline of emerging
gold production projects in Brazil
and Peru
and strengthen its future production profile.
Mundo Minerals has completed initial due
diligence indicating the presence of advanced exploration targets on both
projects which will enable the Company to undertake a short-term assessment of
their potential. Significantly, both transactions have been structured to enable
the Company to assess the potential of the projects before committing
significant capital to acquire the assets.
Nova Prata Gold
Project, Tocantins JV (Brazil)
The Tocantins Gold Joint Venture, (Mundo Minerals 51% and Gameleira Ltda 49%) has reached agreement with a private syndicate to
enter into a joint venture to explore for gold on the Nova Prata gold tenements located on the same greenstone
belts that Mundo Minerals is exploring as part of its
Tocantins Gold Project Joint Venture in central Brazil.
The strategically located tenements
(see Fig. 1) include significant geochemical anomalies which represent advanced
exploration targets.
This will provide an opportunity for
Mundo to undertake an early assessment of the
potential of the Nova Prata tenements to deliver gold
production.
Under the terms of the Nova Prata joint venture, the Tocantins Gold Joint Venture can
earn an initial 57% equity in the joint venture tenements by spending
US$800,000 over a three year period. If production is not initiated within a
period of five years of the commencement of the joint venture, the Tocantins
Gold Joint Venture will relinquish a 2% equity in the joint venture annually
for a maximum of three years, after which there is no further equity penalty.
Should production not commence within a period of 13 years of the commencement
of the joint venture, then ownership of the tenements will revert back to the
original owners.
The Tocantins Gold Joint Venture can
increase its equity in the Nova Prata Joint Venture
to 70% by taking the project through to bank feasibility status.
The location of the Nova Prata tenements in relation to the existing Tocantins Joint
Venture tenements is shown below:
Fig. 1 Nova Prata
Gold Joint Venture
Access to the tenements and the
logistics associated with exploration and the potential future development of a
gold project at Nova Prata is excellent, with
numerous towns, sealed roads and other infrastructure including grid power
being readily available to support development of a project.
An initial exploration programme is currently being developed and the Company
expects to commence exploration activity at Nova Prata
in the next few months.
Jaqueira Gold Project, Bahia (Brazil)
Mundo Minerals is pleased to advise that
it has secured an option to acquire a portfolio of tenements comprising the Jaqueira Gold Project, located 330km north
east of Salvador, the capital of Bahia state in
north-eastern Brazil
(see Fig. 2).
Fig. 2 Jaquiera
Gold Project, Brazil
The Jaquiera
Project lies in the Jacobina Gold Belt where mining
activities were first initiated by the Bandeirantes
in the late 17th century and Garimpeiros
have been actively mining since the 1930s. Canadian gold producer Yamana Gold Inc. currently controls most of the mineral
rights in the belt after acquiring them from Desert Sun in 2003. Yamana’s portfolio includes the Jacobina
mine, which produces approximately 100,000oz per year.
The Jacobina
Gold Belt extends for approximately 155 kilometres
with the regional stratigraphy comprising quartzites, metaconglomerates and
schists of the Paleoproterozoic
Jacobina Group which form a series of north-south,
elongated, mountain ranges. The gold deposits of the belt are
predominantly conglomerate-hosted, encompassing the pyritic, gold-bearing,
quartz-pebble conglomerates and quarzites of the
Serra do Corrego Formation.
Mundo Minerals has negotiated an option
to acquire three mineral rights, including a farm, comprising the Jaqueira block and five mineral rights known as the Pindoba�u block. Previous mining activities have been
conducted on both tenement blocks.
Under the terms of the option
agreement Mundo Minerals is making an initial payment
of BRL75,000 (approximately A$48,000) on signing, quarterly payments after 3, 6
and 9 months of BRL25,000 (approximately A$16,000) each and a payment of
BRL75,000 after 12 months. Final quarterly payments of BRL25,000 must then be
made each quarter to the end of the 36-month option period. Mundo
Minerals may at any time during the initial 24-month period exercise the option
to acquire the Jaqueira block by paying R7.50
(approximately A$4.80) per ounce of gold contained in Measured and Indicated
Resources defined on the block
The Company may also acquire the Pindoba�u property under the same commercial terms within
the 36-month period.
The payment will be converted to a grammes per tonne gold equivalent
on the date of signing the option agreement and the final payment will be based
on converting the gold price at the exercise date by the agreed gram per tonne to allow for compensation upwards or downwards in
movement of the price of gold during the option period. In addition, a 2.5%
royalty on future gold sales in payable under the agreement.
Part of Mundo
Minerals’ due diligence process for the Jaqueira
Project was to compare chip samples taken from the existing workings to
historic production records. This indicated a strong correlation, suggesting
that the tenements have strong exploration potential. The size and depth of the
existing underground excavations provides further evidence of the consistency
of the mineralisation in terms of grade and geometry
when considering the rudimentary mining and processing techniques utilized by
the miners historically.
Mundo Minerals is proposing to undertake
a programme of diamond drilling during the option
period to assess the resource potential of the Jaqueira
tenements. Based on the historical information and the Company’s initial
due diligence assessment, Mundo Minerals believes
that the tenements have potential to support an exploration target of up to
500,000 ounces of gold at grades that would justify an underground mining
development.
Infrastructure in the region is
excellent, including ready availability of power and water, and access to the
project site is also very good via the BR-324 highway. The region has an
active mining industry supporting engineering and associated skills and a
skilled local workforce.
Mundo Minerals expects to commence
initial exploration work on this project within the next two months.
Summary
Both the Nova Prata
and Jaqueria Projects represent low-risk
opportunities for Mundo Minerals to further broaden
its asset base in South America and enhance
its pipeline of potential production assets. Both are considered to have
advanced exploration potential with a good chance of developing into production
assets.
With gold production scheduled to
commence later this month at the 100%-owned Engenho
Gold Project in Brazil and
exploration and feasibility activities progressing at its other assets in Brazil and Peru,
the Company is well placed to target and secure additional opportunities in Latin America.
Both transactions have been
structured to enable Mundo Minerals to assess the
projects rapidly and maximise its equity exposure
should the project assessment be successful. The payment terms will facilitate
a proper risk assessment without exposing Mundo
shareholders to excessive capital payments before completing this evaluation.
Both of these projects complement Mundo Mineral’s existing pipeline of three
exploration and production assets, which underpin its initial objective of
identifying a sustainable 250,000oz per annum production base within the next
3-4 years.
John Langford
Chief Executive Officer
Competent
Person’s Statement
The information in
this report that relates to Exploration Results and Mineral Resources is based
on information compiled by Mr Jean-Marc Lopez who is
a Member of the Australasian Institute of Mining and Metallurgy. Mr Lopez is employed by Mundo
Minerals Limited and is the Company Exploration Manager. Mr
Lopez has sufficient experience which is relevant to the style of mineralisation and the type of deposits under consideration
and to the activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the “Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves.
Background Information
Mundo Minerals Limited
is an Australian gold company focused on the exploration and development of a
portfolio of advanced, high-quality gold assets in South
America with the potential to position the Company as a
substantial mid-tier Australian-domiciled gold production house.
Mundo is aiming to
commence initial production at its flagship asset, the Engenho
Gold Project in Brazil,
by March 2008, laying the foundations for its growth strategy as a mid-tier
Australian-domiciled producer focused on small-to-medium sized high-grade ore
bodies in South America.
The Engenho Project, which is located in the State of Minas Gerais in Brazil,
was previously operated by AngloGold Ashanti Limited which closed it in 2004
after treating some 171,257 tonnes of ore from an
open pit through a conventional Carbon-in-Pulp (CIP) treatment facility.
Mundo’s other two exploration
assets in South America are the 100%-owned Torrecillas
Gold Project in Peru and
the Tocantins Gold Project in Brazil. These projects have the
potential to yield multiple resources to underpin the Company’s long-term
growth.
The Torrecillas Project comprises some 9,000ha of tenements
with a history of high-grade gold production in south-eastern Peru, a region
which hosts a number of small-to-medium sized gold mines, including the Area, Capitana, Arirahua, Alcapay and Laytaruma operations
– each of which have a production range of 25,000 – 80,000oz per
annum.
The Tocantins
Project is a joint venture where the Company has agreed to spend US$1.3M to
earn a 51% interest in tenements controlled by Gamaleira
Prospeccao E Geologia Ltda (a Brazilian joint venture between AngloGold Ashanti
and IAMGOLD Corporation). Mundo can increase this
equity to 80% by taking any gold resource to a bankable feasibility study. The Tocantins tenements are located in a highly prospective
region which includes three greenstone belts with the potential to contain
multiple mid-size gold deposits.
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