The agreement follows on from significant recent drilling results on the Jimmy’s Creek copper-gold-silver breccia discovery where Red Metal reported a broad 153m interval of mineralized breccia averaging 0.6% copper equivalent from 426m including a 32m at about 1.5% copper equivalent from 492m.
The recent result is the best mineralised intercept discovered on the prospect to date and together with other holes highlights the potential for large tonnages of breccia style mineralization.
As per the terms of the agreement, Xstrata have the right to earn 51% of the Corkwood group of tenements by spending $5.5m on exploration over four years.
After earning 51%, Xstrata have a one off election to earn an additional 9% of the project (60% in total) by sole funding a further $9m towards completion of a feasibility study over a further three-year period.
The agreement insures an active drill intensive field program with a minimum annual commitment of $600,000 per year during the initial earn-in period and $2m per year during the sole funding period.
Xstrata have allocated a budget of about $780,000 to the joint venture project in the first year with a commitment to initiate a 2400m follow-up drilling program on the Jimmy’s Creek discovery before 31 May 2011.
