Condor de OroLetter of Intent Signed with Mariana Resources Limited
On October 2, 2012 a binding letter of intent (the "LOI") was signed with Mariana Resources Ltd. ("Mariana") (TSX: MRY) for Condor's Condor de Oro project.
Under the terms of the LOI, the Condor de Oro project has been divided into two blocks covering the Pucayacu target (Area 1), and the Yuracyacu target (Area 2). The two target areas are located approximately 8 km apart. The LOI gives Mariana the option to earn a 51% interest in Areas 1 and 2 of the Company's Condor de Oro project upon total cash payments of $US5 million and exploration expenditures totalling $US25 million over a four year period.
At Pucayacu (Area 1), Mariana has an exclusive option to earn a 51% interest in the 34 sq km block. In order to exercise this option, Mariana must make cash payments to Condor totalling US$2.5 million and complete exploration expenditures of US$12.5 million within four years. The LOI stipulates a mandatory work program of 1500m of diamond drilling in year one at Pucayacu. A non-refundable US$50,000 payment was made upon signing of the LOI.
The Yuracyacu target lies northeast of Pucayacu within the remaining 68 sq km of the Condor de Oro concessions (Area 2). By a payment of US$50,000 within 15 days of signing the LOI, Mariana will acquire a 90 day exclusivity period with respect to Area 2. Providing Mariana is satisfied with the results of their due diligence (which includes a mandatory geochemical sampling program), and by payment of US$50,000 at the conclusion of the 90 days, Mariana will have an exclusive option to earn a 51% interest in the Area 2 concessions. The terms of the Area 2 option are similar to the Area 1 option, with a 51% interest earned after cash payments of $US2.5 million and exploration expenditures of $US12.5 million over a four year period.
• 102 sq km in the Cordillera del Condor, one of the most significant emerging and underexplored gold-copper belts in South America, and host to Kinross' Fruta del Norte gold deposit (inferred reserves* of 13.7M oz Au) in Ecuador. Virtually the entire Cordillera del Condor belt is now staked on both sides of the Ecuador/Peru border.
• Condor's property on the Peruvian side of the border shares key geological features with Fruta del Norte but has had little modern day exploration and no prior drilling.
• Two large gold and base metal targets defined, with coincident geophysical, gold and multi-element rock, soil and stream sediment anomalies.
• Placer gold occurs in creeks within both target areas.
• Potential to host a multi-million ounce gold and base metal deposit.
Prospective for: Gold/Copper/Silver
The 102 sq km Condor de Oro project is situated along the Peruvian border with Ecuador and lies within the Cordillera del Condor, potentially one of the most significant emerging gold and copper belts in the world. On the Ecuadorian side of the border, recent discoveries within the belt include the Kinross/Aurelian Fruta del Norte gold deposit, located approximately 124 km to the NE, with published reserves* of 13.7Moz gold and 22Moz silver, and CRCC-Tongguan Investment (Canada) Co. Ltd.'s (formerly Corriente Resources Inc.) Mirador Copper District, located north of Fruta del Norte, with inferred resources* of 1.7Bt grading 0.6% Cu. On the Peruvian side of the border, approximately 54 km west of the Condor de Oro project, is Zijin Mining's Rio Blanco copper-molybdenum project with reported reserves of 1.2Bt grading 0.57% copper and 228 ppm molybdenum.
There has been very little modern day exploration carried out to date along the Peruvian side of the border due largely to past geopolitical events and restrictions imposed by the Peruvian government. Prior to 1992, for example, mineral exploration was not permitted along Peru's border regions. The mining code was revised in 1992 to permit mining in the frontier regions but a border dispute broke out between Peru and Ecuador shortly thereafter and was not resolved until 1999.
Irrevocable option to acquire 85% interest in 82 sq km. The property vendor holds a 1% net smelter returns royalty, and a 15% interest carried to commercial production. Condor has the right to purchase the royalty at any time for US$2 million. The property vendor's interest is fully-carried and non-contributing until the completion of a feasibility study, at which time the property vendor will receive an additional 1 million shares. All costs incurred by Condor on behalf of the property vendor following completion of the feasibility study will be recouped with interest from the property vendor's 15% share of production proceeds.
In October 2009, Condor secured an irrevocable option to acquire a 100% interest in two additional concessions (20 sq km) expanding the size of the Condor de Oro project to the northeast.
Gold-bearing rock outcrop and float was originally discovered on the Condor de Oro property in 2003 and was followed by stream sediment, soil and rock sampling as well as an airborne magnetic geophysical survey. This work was performed by Monterrico Metals plc, is not NI-43-101 compliant and therefore may not be relied upon, Monterrico's work reportedly returned highly anomalous gold and base metal geochemical results with a coincident magnetic high over an area of approximately 4 sq km along the western boundary of a large magnetic low. Artisanal placer gold workings occur within this area, since named Pucayacu. This large gold and base metals target has never been drilled.
The Pucayacu target is characterized by intense quartz-sericite-clay alteration along with abundant disseminated pyrite (plus limonite) and strong quartz vein stockworks with limonite-pyrite and secondary copper. Chalcedonic quartz and jasper are also present, these being products of multiphase hydrothermal activity in an intrusive related gold system, similar to that at Fruta del Norte. Previous sampling by Condor returned peak values of 13.2g/t Au in rock chip samples from outcrop, as well as 8.2g/t, 11.95 g/t, and 16.0 g/t Au from rock float, and soil samples with peak values of 1.56 g/t and 1.99 g/t Au.
The second target on the property, named Yuracyacu, occurs about 8 km northeast of Pucayacu. At this target, a zone of intense alteration and abundant stockwork quartz veins occurs along the northern boundary of a magnetic low and also exhibits a coincident magnetic high. Former artisanal placer workings are also present in streams draining the 4 sq km target. As in the case of Pucayacu, the Yuracyacu target has never been drill tested.
• A long-term agreement was signed in mid-2010 with the local community at Condor de Oro, one of the first of its kind in the Cordillera del Condor in Peru.
• LOI signed with Mariana Resources Limited in October 2012. Condor and Mariana are currently working on a definitive option and joint venture agreement (the "Definitive Agreement") which will incorporate the principal terms of the LOI in a more detailed nature.
* "Reported reserves are inferred only, and from the websites and public documents of the Companies whose deposits are mentioned."