Pan American dishes Tres Cruces

Vancouver — Pan American Silver (PAA-T) has accelerated a deal to sell its 50% interest in the Tres Cruces gold project in Peru.

New Oroperu Resources (ORO-V) picked up the stake, giving the junior sole ownership of the project. The newly restructured company first struck a deal to acquire Pan American’s half-stake back in May 2002 by agreeing to spend more than US$1.7 million over 42 months and issuing 1.5 million shares to Pan American over 30 months. Once New Oroperu fulfils the option agreement, Pan American will receive additional shares to hold a 20% interest in the company, while retaining a 2% net smelter return royalty.

The latest arrangement sees Pan American getting 3.5 million shares. The producer also retains a 1.5% net smelter royalty on the property. The sale is expected to close in January 2004.

After the first deal, New Oroperu struck a separate deal with Barrick Gold (ABX-T), allowing the major to earn an initial 65% interest in Tres Cruces by spending US$1.7 million over the next 40 months and carrying New Oroperu through to a production decision. In addition, Barrick will make cash payments totalling US$700,000 over 42 months and US$250,000 per year thereafter.

A grassroots gold discovery immediately outside Pan American’s Quiruvilca mine land boundary in 1996 resulted in the formation of a 50-50 joint venture between the silver producer and Oroperu. Subsequent work by Oroperu and Battle Mountain Gold, which optioned the project in 1998 and 1999, included more than 34,000 metres of drilling and extensive metallurgical tests. Battle Mountain estimated an indicated and inferred resource totalling 1.6 million oz. gold in 30.4 million tonnes grading 1.65 grams.

Much of the contained gold is refractory in nature, requiring costly processing. After incurring exploration expenditures of US$4.5 million, Battle Mountain deemed the project uneconomic and handed it back to Pan American and Oroperu in December 1999.

Barrick’s first bout of work included 4,029 metres of drilling in 14 holes. Hole 202 intersected 186 metres grading 1.2 grams gold per tonne on the east margin of the south zone deposit.