Estrella Gold Corporation (TSX VENTURE:EST) ("Estrella" or the "Company") is pleased to announce that exploration work has begun on the Yanac Project in October 2013 by its JV Partner. The Yanac project is located in Departamento Ica approximately 35 kilometers northeast of the town of Chinca Alta, Peru.
Geologically, the property is comprised of a coarse-grained granodiorite (J-K Coastal Batholith) which has been intruded by more felsic, copper-bearing, hypabyssal dikes and plugs. Currently, a field camp is on site at Yanac, and two geological teams are conducting detailed and reconnaissance geological mapping and geochemical sampling. An Induced Polarization survey is planned for later this year, and it is hoped that the mapping/sampling and geophysical surveying will delineate targets that can be drill tested in 2014.
The Yanac Project is a 50-50 joint venture project between Estrella Gold Corporation and Cliffs Natural Resources Exploration Inc., a wholly owned subsidiary of Cliffs Natural Resources Inc. (NYSE:CLF) (PARIS:CLF) ("Cliffs"). Cliffs is required to expend a minimum of US$500,000 exploring Yanac during the first year of the joint venture. Cliffs can acquire an additional 20% interest in the Yanac joint venture, for a total 70% interest, by spending a minimum of US$4,000,000 and completing 3,000 meters of drilling by February 27, 2017. If Cliffs does not acquire the additional 20% interest, the property reverts 100% to Estrella, subject in certain circumstances to a potential NSR royalty in favour of Cliffs. Upon earning 70% interest, Cliffs can acquire an additional 10% interest to a total 80% interest in Yanac by completing an NI 43-101 Compliant Pre-Feasibility Study or by defining a compliant Inferred Mineral Resource containing a minimum of 1,000,000 ounces of gold or gold equivalent, within four years of earning its 70% interest. If Cliffs elects not to earn an additional 10% interest, Cliffs will pay Estrella US$2,000,000 within 60 days and the parties will fund their proportional interest, subject to conventional dilution. If either party's interest in the Project is reduced to 10% or less, that interest will convert to a 2% NSR royalty.
Under the terms of the earn-in agreement, Cliffs will fund and manage all exploration work on the Project. The Yanac project was identified as a Property of Merit in 2011 under the Alliance Agreement with Cliffs.
Mr. John R. Wilson, President and CEO of Estrella, commented, "We believe that the project has the potential to host a significant porphyry copper deposit, and we are extremely pleased that the project is moving ahead under Cliffs' supervision. Continuing work with Cliffs on this project offers the potential for increasing Estrella shareholder value, and we look forward to encouraging news in the coming months."
