Austral Gold Argentina has signed a binding offer letter with Mexplort Perforaciones Mineras to establish a 50:50 joint venture for new precious metal projects in Argentina.

The new JV will engage in the identification and development of new precious metal projects in the Indio belt in the Province of San Juan in Argentina.

As per the terms of the agreement, Austral Gold will have an earn-in-option to purchase a 50% stake in the Jaguelito project held by Mexplort.

Jaguelito, an advanced exploration stage project in the Province of San Juan, is a high-sulphidation deposit that is already drilled up to 30,000m.

Austral Gold CEO Stabro Kasaneva said: “We are investing in the Jaguelito project as we believe the project has the potential to discover a high sulphidation deposit of the Alturas – Del Carmen or even Veladero type in Argentina.

“The Jaguelito project appears to have the same affected volcanic units that host a large zone of alteration having the same age based on evidence of mineralization of silver and gold intercepted in previous drilling campaigns.”

To secure a 50% stake in the Jaguelito project, Austral Gold has to provide $2m exploration expenditures related to Jaguelito within two years from the approval of the option by the Instituto Provincial de Exploraciones y Explotaciones Mineras de la Provincia de San Juan (IPEEM).

Austral Gold will also have to provide again $2m exploration expenditures within two years after completing the first stage.

In addition, the company has to pay $3m to Mexplort if the board of the JV company approves the construction of the project based on a bankable feasibility study (BFS).

Austral Gold Argentina is a subsidiary of Austral, while Mexplort is a subsidiary of Corporación America International.