Zincore announces strategic partnership with First Quantum Minerals to accelerate work on copper and zinc projects
VANCOUVER, BRITISH COLUMBIA–(Marketwire – May 8, 2012) – Zincore Metals Inc. (TSX:ZNC)(LMA:ZNC) (“Zincore” or the “Company”) is pleased to report that it has entered into a strategic partnership with First Quantum Minerals Ltd. (TSX:FM)(LSE:FQM) (“First Quantum”) Under the terms of a binding Memorandum of Understanding (“MOU”), First Quantum’s wholly-owned subsidiary, FQM (Peru) Ltd will make a strategic investment in Zincore via private placement for 19,113,874 common shares at $0.20 per share (the “Private Placement“) and fund the advancement of Zincore’s Dolores copper porphyry project through exploration and, if warranted, development and production. The Dolores project is located in the prolific Yauri-Andahuaylas Copper District of southern Peru, approximately 40 kilometres from the Haquira deposit, which First Quantum is currently developing.
Zincore President and CEO, Jorge Benavides, commented “We are absolutely delighted to announce First Quantum as our strategic partner. They are a world-class mining company with great financial strength and specific expertise gained from the project they are developing at Haquira, which is located in close proximity to Dolores. The benefits of this partnership to our shareholders are significant and extend beyond the Dolores project. The funds that First Quantum will invest in Zincore will allow us to more actively pursue the Pre-Feasibility Study for our flagship project, the Accha Zinc Oxide District. At the same time, funds will be available to explore the Dolores area much more aggressively than we could on our own. This will put us in a good position to deliver significant results for both our copper and zinc projects to the market sooner than we could without the help of our new strategic partner. We are operating in a time of difficult capital markets and a strong strategic partner will be able to help us minimize share issuance dilution while still allowing us to achieve important milestones.”
Mr. Benavides concluded “In addition to moving our existing projects forward now, working with such a strong partner in the regional exploration of our 50,000 hectare land package, with its prime copper potential location in the Yauri-Andahuaylas copper belt, we also expect to generate exciting new targets as well as advance exploration at our Minasccasa copper-zinc skarn.”
Under the terms of the MOU, which is subject to TSX approval, First Quantum can earn up to an 80% interest in Zincore’s Dolores project over eight years by achieving specified objectives.
Highlights of the Strategic Investment and Joint Venture Include:
- First Quantum to invest C$3.8 million in Zincore via private placement at C$0.20 per share
- Zincore will conduct a regional exploration program on its concessions using a minimum of 60% of these private placement funds, including a minimum of US$1 million in the 12 months following closing of the private placement
- First Quantum will have the right to nominate one representative to Zincore’s board of directors
Dolores Project Earn-In Overview
- First and Second Earn-Ins: First Quantum commits to spend US$3 million at Dolores within one year of signing a formal agreement (to be signed within 60 days of the date of the MOU) (the “Formal Agreement Date”) to earn an unvested 30% interest in Dolores
- 30% interest will vest if First Quantum provides written notice (the “Vesting Notice”) within 60 days of the first anniversary of the Formal Agreement Date that it will commit to spend an additional US$5 million (the “Second Earn-In”) within 18 months of the Vesting Notice
- Zincore will be the operator until First Quantum has fulfilled the requirements of the Second Earn-In with oversight from First Quantum by way of a technical committee
- Third Earn-In: First Quantum can earn an additional 9.9% in Dolores by producing a NI-43-101 compliant Indicated resource estimate (and associated technical report) of more than one million tonnes of contained copper at a 0.20% cut-off grade within three years following the Vesting Notice
- Fourth Earn-In: First Quantum will have the option to earn an additional 10% of Dolores by providing within four years of the Vesting Notice studies in sufficient detail that under industry customs a fully informed construction decision can be made
- Fifth Earn-In: First Quantum can acquire an additional 10% interest in Dolores provided that commercial production at Dolores commences within 96 months of the Formal Agreement Date. First Quantum will be responsible for funding all costs associated with construction of a mine and bringing the Dolores Area to commercial production including Zincore’s share of capital expenditures for construction
TD Securities Inc. acted as sole financial advisor to Zincore on this transaction.
The Dolores Copper Porphyry Project
Zincore’s 100%-owned Dolores Project is located on the Company’s Accha Zinc Oxide District in the Yauri-Andahuaylas Copper belt in southern Peru, near significant copper mines and developments such as Xstrata’s Las Bambas and Tintaya, HudBay’s Constancia and First Quantum’s Haquira. To date, Zincore has published results from 10 drill holes, two trenches and a number of surface samples at Dolores.
First Quantum’s Haquira Copper Project
Haquira is one of the world’s major undeveloped copper deposits with excellent potential for a large-scale copper mine. It is located in southern Peru adjacent to Xstrata Copper’s Las Bambas copper-gold project. First Quantum’s acquisition of Antares Minerals and its principal asset, the Haquira deposit, was finalized in December 2010. The deposit has reported measured and indicated resources of 3.7 million tonnes of contained copper equivalent and inferred resources of 2.4 million tonnes of contained copper equivalent. First Quantum’s current priorities at Haquira are to expand the infill and condemnation drill program, initiate the process to expand the exploration program to enhance the resource base, and commence the environmental impact assessment (EIA). A $30-million budget has been allocated to the drill program. An updated reserve and resources estimate and the EIA are expected in mid-2012.
Zincore is a Vancouver-based mineral exploration company focused mainly on zinc and related base metal opportunities in the Americas, namely Peru, Mexico and Canada. The Company’s common shares trade on both the Toronto and Lima Stock Exchanges under the symbol ZNC. For more information, please see our website at www.zincoremetals.com.
About First Quantum Minerals
First Quantum Minerals is a rapidly growing mining and metals company currently operating two mines and developing five projects worldwide. The Company’s core strength is discovering, developing and operating mines efficiently and cost-effectively. It’s stated aim is to become a globally diversified mining and metals company. (www.first-quantum.com)
Forward-looking Statements: Statements in this release that are forward-looking, in particular with regards to the potential of the Dolores project, are subject to various risks and uncertainties concerning the specific factors disclosed under the heading “Risk Factors” and elsewhere in the Annual Information Form of Zincore dated March 19, 2012 which is filed with Canadian securities regulatory authorities and available on SEDAR (www.sedar.com). Such information contained herein represents management’s best judgment as of the date hereof based on information currently available.