Herencia Resources Regulatory News (HER)

28 Jul 2005 15:45

Herencia Resources PLC28 July 2005 Herencia Resources plc ("Herencia" or "the Company") Acquiring Interest in Silver Projects in Chile 1. Overview Herencia is pleased to announce that it has entered into a heads of agreementwith Mineral Securities Limited ("Minsec") by which it agrees to purchaseMinsec's interest in the Iquique and Paguanta silver projects in northern Chile. The Company will acquire the interest through the purchase of TarapacaResources (Bermuda) Limited and its wholly owned subsidiaries ("Tarapaca Group"). Companies in the Tarapaca Group have entered into joint venture agreementswith Campania Minera Costa Rica ("Costa Rica") in respect of the projects. Thetotal consideration will be the issue of up to 150,000,000 fully paid ordinaryshares. The terms of the agreement are summarised in section 5 below. Herencia Chairman, Tony Barton, said: "This is an important acquisition forHerencia as both the Iquique and Paguanta projects occupy an extensive area withknown mineralised systems. The projects represent a compelling explorationopportunity as neither has been subjected to drilling or any modern explorationtechniques." 2. Iquique Project Overview In the Iquique silver district, there are numerous old silver workings datingback to Inca Empire and the Spanish colonial era. Costa Rica secured tenementscomprising a total area of approximately 88 km2 covering almost the entire oldIquique silver mining district, which was the second largest silver producer inChile in the 19th Century. This consolidation of the Iquique silver districtunder a single ownership structure will provide an opportunity to apply modernexploration methods to discover new silver and copper deposits. The project is located 18km from the deep water port of Iquique, near thewestern edge of a high plateau. The main road from Iquique to the nitrate mineswhich are located immediately east of the silver workings passes through theproject area. Iquique has a population of approximately 140,000 and offersextensive services and necessary infrastructure for the mining industry, as wellas several flights a day to Santiago. There are numerous old silver mines, divided into groups, with mineralisation inveins extending along east-west structures and around porphyry intrusions. Inaddition to silver, some copper has been produced in the past. In recent times,dumps from old mines have been retreated, with average grades reported to be200-300g/t Ag. The majority of old mines were underground, following narrowveins to depth. However, in the earliest mining period, wider ore bodies wereexploited in near surface, oxidised, friable material that contained silverchloride mineralisation, which would appear to be amenable to processing bysimple leaching methods. One of the objectives of this project is to investigate the potential for bulkopen cut mining of silver deposits in weathered oxidised rock where surfaceprocesses may have enriched silver chloride and other silver minerals. Inaddition, the search for manto and skarn type silver-copper deposits like thosemined in similarly mineralised districts in Peru and Mexico will be undertaken.Some shafts have intersected replacement copper and silver mineralisation withinfavourable limestone stratigraphy marginal to porphyry sills. Iquique Project Exploration Programme The programme will initially target zones with old workings on silver rich veinsand other types of mineralisation, focussing on surface regolith features withpotential for open cut mining and simple processing. This will include samplingof dumps of old workings (which occur in zones extending over several kilometresstrike length), followed by drill testing of zones with significant width ofmineralisation of interest. The programme will also target potentially largermanto and skarn deposit styles of silver and copper mineralisation. Geochemicaland magnetic surveys will be undertaken to define such targets, followed bydrilling. Joint Venture Terms A wholly owned subsidiary of Tarapaca has entered into a joint venture agreementwith Costa Rica, whereby the subsidiary has the right to earn up to a 70%interest in the Iquique project by contributing US$2 million towards explorationactivities on the project. In order to retain its interest in the project, theTarapaca group must contribute US$0.5 million within 18 months and US$2 millionwithin 36 months to the project. 3. Paguanta Project Overview The Paguanta project is well located in the northern part of the main Chileanporphyry copper belt, approximately 120km east of the coastal port of Iquique.Costa Rica secured a 39 km2 tenement which covers known silver-zinc-goldmineralisation ("Patricia Zone") and copper-silver mineralisation ("Doris Zone"). Minsec was attracted to Paguanta by an historic silver mine, which wasactive 130 years ago when small-scale underground mining of high grade silverveins was undertaken. Previously restricted by access, Costa Rica recently constructed a 28km roadfrom the Iquique-Oruro (Bolivia) highway southward across the Tarapaca Rivergorge to the project area. With the new road access is now relativelystraightforward and has opened up the area to modern exploration. The site isat 3,500-3,800 metres elevation and, in the mineralised areas, the slopes aregentle. Patricia Zone Several high grade silver-zinc vertical lodes or veins were mined in thePatricia Zone and ore was smelted on site 130 years ago. The rock between thelodes, or veins, is pervasively altered and mineralised suggesting potential fordisseminated, veinlet stockwork or breccia mineralisation. In the old mine areathere is silver-zinc-gold mineralisation in high sulphidation epithermal veinsand stockwork breccias hosted by andesite volcanic lavas and porphyryintrusions. The old workings of the Patricia Zone are located within an altered mineralisedzone which is 400 metres wide and extends along strike for 4km along aneast-west structure. Doris Zone Costa Rica has recently discovered the Doris Zone, a virgin mineralised zone tothe north east of the old Patricia Zone workings. Visible copper sulphideminerals chalcopyrite and bornite are seen in outcrop, which are reported toalso contain high silver and anomalous gold values. Cumbre Zone The Cumbre Zone in the southern part of the Paguanta tenement is an area ofsilicified limonitic breccias with some old workings yet to be investigated. Paguanta Project Exploration Programme The initial programme will involve rock chip and stream sediment sampling andgeological mapping. The old working is a drill ready target wheremineralisation is found over a width of 400 metres along the east-west trendingPatricia Zone structure. Follow up work will involve step out drilling alongthe Patricia Zone and drill testing the targets delineated in the Doris Zone. Joint Venture Terms A wholly owned subsidiary of Tarapaca has entered into a joint venture agreementwith Costa Rica, whereby the subsidiary has the right to earn up to a 70%interest in the Paguanta project by contributing US$2 million towardsexploration activities on the project. In order to retain its interest in theproject, the Tarapaca group must contribute US$0.5 million within 18 months andUS$2 million within 36 months to the project. 4. Minsec Minsec is listed on the Australian Stock Exchange. It is a resource investmenthouse that identifies and develops resource projects. 5. Terms of the Agreement and Subscription The heads of agreement contemplates that the Company and Minsec will enter intoan acquisition agreement whereby Minsec will transfer Tarapaca Resources(Bermuda) Limited to Herencia in consideration of the issue of up to 150 millionordinary shares to Minsec ("Consideration Shares"). Herencia will issue 100million of the Consideration Shares upon completion and a further 50 millionshares after the Company has spent US$2,000,000 on the projects. The agreement is subject to: • Herencia and Minsec entering a formal detailed agreement; • approval of the shareholders of Herencia; and • regulatory approvals being granted by the Australian Stock Exchange and the Bermudan Monetary Authority. 6. Reverse Takeover The acquisition will be a reverse takeover within the meaning of the AIM rulesand, accordingly, the Company has requested trading in its shares on AIM to besuspended pending publication of an AIM admission document. **ENDS** Contacts: Tony Barton +618 9325 8888Ross Warner +44 207 223 1731 This information is provided by RNS The company news service from the London Stock Exchange