Freeport enters earn-in on Max Resource’s Cesar copper-silver project in Colombia

U.S. copper giant Freeport-McMoRan has invested US$1.6 million in Max Resource (TSXV: MAX) in return for the chance to earn a stake in the junior’s Cesar copper-silver project in northwestern Colombia.

Under the agreement, Freeport’s exploration-focused affiliate can acquire up to an 80% interest in Cesar by spending a total of $50 million on exploration in addition to the $1.55 million cash payment to Max.

The first stage of the two-stage option would see Freegain gain a 51% interest in return for $20 million in exploration funding commitments on Cesar and a $800,000 cash payment. Max would remain the project operator during this stage. Freeport can earn an additional 29% by funding a further $30 million in exploration over five years and making payments totalling $750,000.

Shares in Max Resource fell 26.2% to 16¢ apiece by 11:20 a.m. ET on the announcement. This gives the Vancouver-based copper junior a market capitalization of $27.3 million.

“Careful consideration was given in selecting the best suited earn-in party for Cesar, and access to Freeport’s global team and expertise is aimed at unlocking Cesar’s potential. Freeport has a track record of global copper discoveries that have proceeded to mine development and production,” Max CEO Brett Matich said in a release.

The early stage Cesar project, situated along the copper-silver-rich Cesar Basin, has seen limited drilling, with Max evaluating 28 targets for an upcoming program. The targets lie across three continuous districts spanning a 120-km belt. This region provides access to major infrastructure resulting from oil & gas and mining operations, including Cerrejón, the largest coal mine in South America, held by Glencore (LSE: GLEN).

Having first identified its district-scale potential, Max has now assembled a land package that spans more than 1,150 km of geology prospective for sedimentary-hosted copper and silver deposits. The property contains 20 mining concessions covering a total of 188 sq. km.

“The Cesar project is host to one of the world’s largest underexplored sedimentary copper-silver systems, and we believe Freeport’s endorsement of the Cesar project is a testament to its potential for hosting a world class deposit,” Matich added.