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MeneameVancouver-based Gitennes Exploration (TSX: GIT) has agreed to sell its rights and interests in the Rio Blanco copper project in Peru for US$1.5mn to the UK's Monterrico Metals (LSE: MNA), the Canadian company said in a statement.
The deal, described as "good" for both parties by the two companies, comprised of US$1mn in cash and US$500,000 in Monterrico shares and is expected to close April 7.
"The project is looking reasonably robust and it's a good moment for Monterrico to move it forward alone," Gitennes president Jerry Blackwell told BNamericas. He said it would be easier for the UK explorer to now find a larger partner to advance the project.
"We will still have exposure to the project through Monterrico shares and a million bucks in cash for future exploration, mostly on our gold-silver projects in Peru," said Blackwell.
Monterrico had been in the process of earning a 75% interest in the project by spending US$4mn on exploration over five years. Expenditure to date, for what would have been a 60% interest, stood at almost US$2mn, Monterrico CEO Chris Eager told BNamericas.
Monterrico is funding the purchase by a placement of 1,333,334 company shares at 0.75 pence sterling each to raise 1mn pounds sterling, equivalent to about US$1.5mn, of which US$1mn will be used to make the cash payment to Gitennes while the remaining US$500,000 will be used for general corporate purposes.
Monterrico now plans to drill another 15,000-18,000m at the Henry's Hill area of the property to define the resource with the pre-feasibility study due for completion in August, said Eager. At that point, the company would launch another capital fundraising to go "straight" into feasibility work, he said.
The aim of the pre-feasibility scoping study is to test and confirm a mineral resource of 200Mt of secondary enriched copper at a grade of 1.2% at Henry's Hill. Recent drilling has confirmed a higher-grade copper zone on the eastern slope of the prospect, the company said previously.
The project is located on Peru's northern border with Ecuador.
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