PAPUA STRATEGIC ALLIANCE
The Company has a 20% interest in a strategic alliance with the Anglo American Group (Anglo) to explore for large copper/gold porphyry deposits throughout Papua and West Papua provinces.
Key elements of the Alliance are summarised as follows:
- Anglo will sole fund exploration expenditure and has an initial 80% interest in projects while Arc Exploration retains a 20% interest;
- Arc Exploration is carried (not free carried) through to a Decision to Mine - with 10% of all predevelopment costs to be repaid by Arc Exploration out of project proceeds (non-recourse to Arc Exploration);
- If following completion of a Feasibility Study, Anglo makes a Decision to Mine then a Joint Venture shall be formed and each of Anglo and Arc Exploration shall participate (and fund capital expenditure) according to their 80/20 project interests. Arc Exploration dilutes if it does not contribute;
- In the event that a resource of less than one million tonnes of contained copper equivalent or 1 million ounces of gold is identified, then Anglo may elect that such project shall either revert to Arc Exploration on an 80/20 basis (with Arc Exploration holding 80%) or that 100% be transferred to Arc Exploration with Anglo retaining a 2% NSR;
- The Alliance has been extended to May 2011;
The first project in this alliance is the Aisasjur Project located at the western end of the Medial Papua-New Guinea magmatic arc, host to the giant copper-gold deposits of Grasberg and Ertsberg. Other than the original Exploration KP covering 9,486 ha, the Company recently announced the signing of two new KPs which add a total of 51,410 ha to the project area.
The project is managed by Anglo and they are targeting blind porphyry copper-gold deposits beneath epithermal-style gold mineralization that was found at surface and at shallow depths when the area was previously held under a Contract of Work. Anglo has completed two programs of scout diamond drilling on the Aisasjur Prospect located in the original KP. A total of 6,906 m in 13 holes has been drilled to-date and some of these have intersecting encouraging signs of deep porphyry-style chalcopyrite-bornite-magnetite mineralisation associated with blind porphyry intrusions. Mineralised intercepts include 26 m at 0.21% Cu & 0.25 g/t Au from 539 m down-hole (ASD-23) and 8 m at 0.26% Cu & 1.3 g/t Au from 712 m down-hole (ASD-26). Anglo believe that the geological signatures of the porphyry intrusions intersected at Aisasjur are similar to Grasberg, located about 500 km to the east, and they plan to significantly expand exploration activity in the project area.
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