Jaguar Mining (TSX: JAG) announced Wednesday it has signed an option agreement with Iamgold (TSX: IMG) on a package of 28 exploration tenements covering an area of more than 27,000 hectares in the Iron Quadrangle of Minas Gerais, Brazil.
Under the agreement, Jaguar has the option to earn an initial 60% interest in the land package by spending $6 million on exploration over four years beginning in the third quarter. The company is required to spend a minimum of $500,000 per year during the earn-in period, and the exploration program must include the completion of at least 5,000 metres of diamond drilling.
Upon Jaguar vesting an initial 60% interest, Iamgold may elect to fund its pro-rata share of ongoing expenditures under a conventional 60/40 JV that will be formed for this purpose.
The Iron Quadrangle has been an area of mineral exploration dating back to the 17th century and contains world-class gold deposits such as Morro Velho, Cuiabá and São Bento. Jaguar currently holds the second-largest gold land position of the producers in the region with just over 35,000 hectares.
“The Iron Quadrangle agreement with Iamgold will serve to enhance and expand Jaguar’s strategic focus, where we already have an impressive footprint with the Turmalina and Pilar operating gold mines and the Paciência mill which has been in care and maintenance since 2012 ,” Jaguar Mining CEO Vern Baker stated.
According to Jon Hill, VP geology and exploration, there is a “multitude of historical mines and mineralized occurrences” within the area, and existing data and ongoing work have shown indications of “tier 1 potential targets.”
Shares of Jaguar Mining jumped 7.7% by 1:20 p.m. EDT on the option agreement announcement. The Toronto-based miner has a market capitalization of C$607.7 million.