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Centenera Mining Corp
Symbol CT
Shares Issued 81,196,963
Close 2018-09-05 C$ 0.08
Market Cap C$ 6,495,757
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Centenera Mining options six projects in Argentina

2018-09-05 11:22 ET - News Release

Mr. Keith Henderson reports

CENTENERA ENTERS INTO LETTER AGREEMENT FOR ACQUISITION OF SIX PRECIOUS METALS PROJECTS, SANTA CRUZ PROVINCE, ARGENTINA

Centenera Mining Corp. has signed a binding letter agreement, whereby it will be granted the right to acquire up to a 100-per-cent interest in six precious metal properties from an arm's-length party, Tres Cerros Exploraciones SRL, through three separate option agreements, as to two properties per agreement. The properties are all located within the highly prospective Deseado massif in Santa Cruz province, Argentina, and together comprise approximately 32,900 hectares. Under the terms of the option agreements, Centenera will be granted an exclusive option to acquire a 100-per-cent interest in the properties by way of staged cash and common share payments, subject to a net smelter return royalty in favour of Tres Cerros.

"This acquisition gives Centenera a meaningful foothold in this important mining and exploration district," stated Keith Henderson, Centenera's president and chief executive officer. "This package of properties was carefully targeted by Tres Cerros, which has patiently acquired the properties through staking over the last two to three years. Tres Cerros is an Argentinean company founded by a group of exploration geologists with extensive experience in the Deseado massif and who have been involved in several discoveries over the last few years, including Cerro Moro, Mina Martha, Joaquin and Virginia deposits. Tres Cerros's geologists have been featured various times on the front cover of The Northern Miner for making gold and silver discoveries in this mining district."

Mr. Henderson continued: "Santa Cruz is a leading jurisdiction for discovery of low- and intermediate-sulphidation epithermal gold and silver deposits with approximately 19 million ounces of gold and 580 million ounces of silver discovered since 1990. For precious metals, it is possibly the highest-ranked exploration destination in South America, and, with a relatively short history of mineral exploration, the discovery potential is expected to be extremely high. The Santa Cruz province is a favourable destination for mineral exploration and mining investment, with multiple precious metals mines in production and senior mining companies such as AngloGold Ashanti Ltd., Pan American Silver Corp., Yamana Gold Inc. and Goldcorp Inc. continuing to explore in the region."

The properties

The properties are all located within the prospective Deseado massif. The Deseado massif is a Jurassic-age volcanic plateau covering 60,000 square kilometres and hosting valuable epithermal precious metal deposits. A short summary of each of the properties is provided herein. Additional information will be presented on the company's website in the coming weeks.

The Cerro Bayo property is situated between the contiguous Verde project (Yamana Gold) located approximately two kilometres to three kilometres to the west and the San Agustin project (Goldcorp) located to the east. The Cerro Bayo property contains areas of exposed vein and/or breccia as extensions to mineralized systems identified in adjacent properties. Due diligence rock grab sampling (four rock samples) conducted by the company returned grades ranging from 0.05 gram per tonne to 0.48 gram per tonne gold and from 7.94 grams per tonne to 572 grams per tonne silver. Centenera's due diligence sampling results are consistent with historical sampling results reported by previous operators (15 rock samples) which returned grades ranging from below detection to 1.07 grams per tonne gold and from below detection to 3,300 grams per tonne silver. There is strong geological evidence suggesting that the prospective rocks exposed at the Cerro Bayo property are high in the mineralizing system with considerable potential below surface.

The principal targets in the La Flora property are the Flora vein and Flora West. The Flora vein is an extension of mineralization at the San Agustin Este project, contiguous to the south and controlled by Hochschild Mining PLC.

The Aylen property is located immediately west of the Martha mine, owned and operated by Hunt Mining Corp. The ground has potential to host an extension of the mineralizing Martha structural zone over a potential strike length of more than four kilometres. A single due diligence rock sample taken by Centenera on the Aylen property returned 0.38 gram per tonne gold and 104 grams per tonne silver, which is on trend from the Martha mine. As geology is similar to that found at neighbouring operations and with mineralization confirmed by initial due diligence, the company believes that there may be potential to build drill targets on the Aylen property.

The Pedro property is adjacent to Mirasol Resources Ltd.'s Nico project. In particular, Mirasol's Resolution prospect, within the greater Nico project, is located less than 200 metres west of the Pedro property. Due diligence grab sampling by Centenera (three rock samples), conducted by the company, returned grades ranging from 0.37 gram per tonne to 44.9 grams per tonne silver and indicate that the mineralization extends onto the Pedro property.

The Fiorentina property is contiguous with the Los Cisnes project, formerly held by Mariana Resources Ltd. and recently acquired by New Dimension Resources Ltd. In particular, New Dimension's El Brio prospect is located just a few kilometres west of the Fiorentina property. Recent drill results from New Dimension's El Brio prospect (August, 2018) include 4.4 metres grading 566 grams per tonne silver and 4.4 metres grading 123.2 grams per tonne silver, while previous drilling by Mariana in 2015 returned 2.9 metres grading 755 grams per tonne silver. Due diligence samples taken by Centenera on the Fiorentina property (nine rock grab samples), returned gold grades ranging from below detection to 1.45 grams per tonne gold, confirming that mineralization at El Brio may extend onto the Fiorentina property.

Finally, the Aguila Mora property was formerly held by Mariana, which reported mapping of 12.5 kilometres of veins at surface.

Planned exploration

Centenera is currently in negotiations with a highly experienced consultant who is recognized as a global expert in these types of deposits and who has specific experience in the Deseado massif, having completed review work for many of the major mining companies working in the area. If retained, the primary objective of the consultant will be to review each of the properties on the ground and to rank them in terms of exploration priority. Initial work is anticipated to focus on detailed mapping, where allowed by exposure, ground geophysics and surface geochemistry, and specific exploration recommendations will drive the subsequent programs.

Commercial terms

The terms of the letter agreement provide that, subject to certain conditions, including TSX Venture Exchange acceptance and the entry into the option agreements, Centenera will be granted the option to acquire a 100-per-cent interest in the properties, subject to a net smelter return royalty in favour of Tres Cerros. The intention of the parties is that they will enter into a separate option agreement for the property groups set out in the attached table.

Property group                                     Properties 
                        
Property group No. 1       Cerro Bayo and La Flora properties   
Property group No. 2               Aylen and Pedro properties           
Property group No. 3    Fiorentina and Aguila Mora properties

During the option period, Centenera will be responsible for maintaining the exploration concessions and permits comprising the properties in good standing; paying all fees and assessments; and taking such other steps required in order to do so. There will be no other work commitments, and any work carried out on the project will be at the sole discretion of Centenera.

The option will be structured as a two-stage option, whereby the company can earn an initial 80-per-cent interest, followed by the remaining 20-per-cent interest, subject to certain royalty conditions. The aggregate acquisition cost of the first option for all three property groups will be $2,887,500 (U.S.) payable in cash and common shares in the capital of Centenera issued to Tres Cerros having a deemed issuance value of $3,675,000 (U.S.) over a period of six years.

The earn-in terms for the first option (for each of the property groups) will be as shown in the attached table (all dollar amounts are U.S. dollars).

Date                       Cash payments     Value of     NI 43-101    Cumulative  
                                            Centenera     technical        earned
                                               shares        report      interest
Within five business days 
from TSX-V acceptance 
for filing of the 
definitive agreement 
(the effective date)             $12,500            -             -             -                        
On or before the first
anniversary of the 
effective date                   $25,000      $50,000             -             -                        
On or before the second 
anniversary of the 
effective date                   $50,000      $75,000             -             -                        
On or before the third 
anniversary of the 
effective date                   $75,000     $100,000            -            35%                       
On or before the fourth 
anniversary of the 
effective date                  $100,000     $200,000             -           51%                       
On or before the fifth
anniversary of the 
effective date                  $200,000     $300,000             -           71%                       
On or before the sixth 
anniversary of the 
effective date                  $500,000     $500,000     Technical           80%                       
                                                             report        
Total                           $962,500   $1,225,000             -             -                        

As part of the earn-in commitment for each property group, Centenera will be required to deliver to Tres Cerros a single technical report in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects, with the subject property being the more advanced of the properties in each of the property groups. Other than the initial $12,500 cash payment (aggregate $37,500 for all the property groups), Centenera will not be obligated to make any payments or issue any stock to Tres Cerros.

For a period of 120 days after the exercise of the first option for each property group, Centenera will have the second option to acquire the remaining 20-per-cent interest (aggregate 100 per cent) in that property group by making a cash payment of $400,000 and issuing shares in the capital of Centenera valued at $400,000 to Tres Cerros, subject to a 0.75-per-cent net smelter return royalty, of which two-thirds of the royalty (0.5 per cent) can be purchased at any time for $1-million.

If Centenera elects not to exercise the second option, the parties will be deemed to have entered into a joint venture, with the initial participating interests of Centenera being 80 per cent and Tres Cerros being 20 per cent. In the event that either party's participating interest falls below 10 per cent, then that party's interest will be converted to a 1-per-cent net smelter return royalty, one-half of which (0.5 per cent) can be purchased by the other party for $1-million.

Quality control and quality assurance

Quality assurance and quality control procedures utilized during due diligence sampling included the systematic insertion of blanks, standards and duplicates into the sample sequences. Samples were collected in October, 2017, and sealed and shipped to ALS Chemex Labs Ltd. for analysis. ALS Chemex's quality system complies with the requirements for international standards ISO 9001:2000 and ISO 17025:1999. Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples.

Cautionary note regarding historical sampling results

Results of historical sampling undertaken by previous operators have been included in this news release to demonstrate consistency of results between Centenera's due diligence sampling results and previous sampling results. Readers are cautioned that quality assurance/quality control procedures and results of historical sampling have not been verified by Centenera geologists and should not be relied upon.

Cautionary note regarding adjacent properties

The Verde project (Yamana Gold), the San Agustin project (Goldcorp), the San Agustin Este Project (Hochschild), the Martha mine (Hunt Mining), the Nico project (Mirasol) and the Los Cisnes (New Dimension) are all adjacent properties. The company has no interest in or right to acquire any interest in these projects or deposits. Mineral deposits on adjacent or similar properties, and any production therefor or economics with respect thereto, are not in any way indicative of mineral deposits on Centenera's properties or the potential production from, or cost or economics of, any future mining of any of Centenera's mineral properties.

Qualified person

Keith J. Henderson, PGeo, is the company's qualified person as defined by NI 43-101 and has reviewed the scientific and technical information that forms the basis for portions of this news release. He has approved the disclosure herein. Mr. Henderson is not independent of the company as he is an employee of the company and holds securities of the company.

About Centenera Mining Corp.

Centenera is a mineral resource company focused 100 per cent on mineral resource assets in Argentina, which include gold, silver, copper-gold and lithium assets. Centenera's assets are located in Salta, San Juan and Santa Cruz provinces, which are widely recognized as being favourable jurisdictions for mining and exploration.

We seek Safe Harbor.

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