Phelps Dodge to earn in on Escalones (April 04, 2005)

An option agreement between General Minerals (GNM-T) and the Chilean subsidiary of Phelps Dodge (PD-N) allows Phelps Dodge to earn a 72% interest in the Escalones copper property, about 100 km southeast of Santiago and 35 km east of the El Teniente copper mine.

The agreement gives the subsidiary, Aurex, a right to a 60% interest in Escalones if it spends US$4 million on exploration by the beginning of June 2010. That interest increases to 72% if Aurex provides a feasibility study within seven years of vesting its 60%.

To maintain its option, Aurex must pay General Minerals US$10,000 in cash up-front and US$250,000 over the next five years.

Escalones, where a 6-sq.-km alteration zone in skarn and porphyry hosts copper showings, has been held and dropped by General in the past. General drilled 25 holes on the property between 1998 and 2001, when it dropped its option because copper prices had fallen drastically. It renewed its agreement with the title holder in 2004.

One hole drilled in 1998 intersected 76.5 metres of copper mineralization grading 1.32% copper, plus 0.13 gram gold and 4.1 grams silver per tonne. The property hosts a large spontaneous-polarization anomaly, and Aurex has started an induced-polarization survey.