Chita Valley Cu-Mo-Ag-Au Project, San Juan, Argentina

In the Quarterly, GK Said:

"Consistent with our focus on adding prospective base metals options, we exercised our earn-in right to acquire a 50.1% interest and operatorship of the Chita Valley copper exploration project in the San Juan province of Argentina. The exercise of our earn-in right follows a three-year exploration partnership at Chita Valley with Minsud Resources Corp. The transaction is expected to be completed in the March 2024 quarter."

What is Chita Valley?

The Chita Valley Project of Minera Sud Argentina S.A., a wholly owned subsidiary of Minsud Resources, is located about 35 kilometers from Bella Vista and Villa Iglesia towns, at the Iglesia department in San Juan province, and consists of three contiguous core properties, namely, Chita, Brechas Vacas and Minas de Pinto mineral concessions, together with five additional adjacent properties. In total the Company controls an area of 19,883 hectares (or 199 kms2).The Project has a NI 43-101 resource estimation of 386 million pounds of copper, of which 310.8 million pounds are indicated resources (33.1 million tonnes @ 0.43%, plus Au+Ag+Mo) and 75.4 million pounds are inferred resources (8.6 million tonnes @ 0.40%, plus Au+Ag+Mo). However, the resource area currently remains open at depth and in both directions of strike.The Project is a large exploration stage porphyry system with classic alteration features, widespread porphyry style Cu+Mo+Ag+Au mineralization and associated gold and silver-bearing polymetallic veins. In addition to the Chita resource area, the Project includes a cluster of untested porphyries including Chinchillones and Placetas.

The Deal

Under the Earn-in Agreement, South32 will provide up to C$14 million in capital contributions to MSA over a period of 4 years, as follows: (i) not less than C$3.5 million by December 31, 2020; (ii) not less than an aggregate of C$7 million by December 31, 2021; (iii) not less than an aggregate of C$10.5 million by December 31, 2022; and (iv) not less than an aggregate of C$14 million by December 31, 2023. South32 has the right to withdraw at the end of each year. Once South32 has complied with its funding obligations, South32 may exercise its right to acquire a 50.1% direct interest in MSA by electing to subscribe for MSA shares equal to 10% of MSA’s shares, in consideration for its funding, and acquire the remaining 40.1% of MSA’s shares from MAI for a consideration of C$14 million.

https://www.minsud.com/projects/chita-valley

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It looks like S32 can buy out Minsud for a total of $28m, not including money spent exploring. The grades are average. The property needs more drilling - dont they all. The resource is open at depth and in two directions of strike.

Chita is a long term option - in the current era, mines take years if not decades to stand up. Still, one prefers more options than fewer.

Ash