$10mill "free ride" on exploration

Aurora Minerals enters Joint Venture
on its Hazelbrook Project
Northland Volcanic Zone
New Zealand
Aurora Minerals Limited (ASX stock codes ARM and ARMO, NZX stock codes
ARM and ARMOA) is pleased to announce that it has entered into a joint venture
with New Zealand company Emerald Mining Limited (“Emerald”) on Aurora’s large
Hazelbrook epithermal gold project in the North Island of New Zealand.
Emerald is a part of the Auckland-based Emerald group of companies, a group with
European financial connections and extensive investments in New Zealand including
property development, power infrastructure and equipment, tourism and forestry. The
Emerald group also has a dairy operation in the Hazelbrook area through Emerald
Farming Limited.
Under the terms of the joint venture agreement Emerald may provide NZ$10 million
(approximately A$9.5 million) for expenditure on Aurora’s Hazelbrook Project to
earn a 50 % interest. Key terms are as follows:
Key Terms of the Aurora–Emerald Hazelbrook Joint Venture Agreement:
- Emerald will provide an initial NZ$2 million to the Hazelbrook Joint Venture
for expenditure on the project over the next 12 months
- Emerald has the right to provide a further NZ$2 million per year for each of
the following 4 years to the Hazelbrook Joint Venture for expenditure on the
project
- Emerald Mining will have earned a 50% interest in the Hazelbrook Joint
Venture after providing a total of NZ$10 million for expenditure. It may also
choose to provide the NZ$10 million to the Hazelbrook Joint Venture in
advance of the 4 year timetable noted above.
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- Aurora will not be required to contribute any funds until the NZ$10 million is
spent
- Aurora Minerals has the right to manage the Hazelbrook Joint Venture while it
maintains a 50% or more interest and will have a casting vote on the joint
venture operating committee while it maintains a 50% or more interest.
- Emerald may withdraw from the joint venture following the expenditure of the
initial NZ$2 million.
Following expenditure of Emerald’s NZ$10 million both Aurora and Emerald
can each individually elect to contribute 50% of ongoing joint venture
expenditure, or either party can elect to gradually dilute under a standard
industry formula.
- Aurora and Emerald to negotiate a development joint venture agreement in the
future if they discover a deposit which warrants preparation of a bankable
feasibility study for mining.
- The joint venture incorporates all of Aurora’s current Hazelbrook project
comprising Prospecting Permit 39 270, covering 1013 square kilometres, and
Exploration Permit 40 730 within it, and other permits the joint venturers
agree from time to time.
- Under the Crown Minerals Act the joint venture is subject to the consent of the
Minister responsible for administering the Act.
The directors of Aurora believe the joint venture provides a funding mechanism to
advance exploration, especially the expensive drilling phase, and potentially future
development of the project.
Emerald have commented: “We welcome this investment in the Hazelbrook Joint
Venture with listed company Aurora Minerals in what is a promising epithermal gold
exploration project with the potential to add value to our investors’ global portfolio”.
Background
The new Hazelbrook Joint Venture will continue the exploration commenced by
Aurora for a Martha-type epithermal quartz vein gold deposit at Hazelbrook. The
Martha mine lies to the south of and in a similar geological setting to Hazelbrook, and
has produced approximately 7.5 million ounces of gold to date at an average grade of
approximately 7.4 g/t gold.
The Hazelbrook project is located in the Northland Volcanic Zone of New Zealand,
which is on the "Pacific Ring of Fire" which is known to host large epithermal gold
deposits of which Martha is one example.
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Aurora commenced field exploration at Hazelbrook in October 2004 and is pleased
with progress to date. The company’s recent announcements include details of the
discovery of surface gold in rock chip, soil and rock float sampling at the Backyard,
Toolshed and Te Mata prospects.
The first stages of rock chip sampling and mapping produced encouraging grab
sample results from epithermal quartz veins discovered at Backyard prospect with
assays up to 6.8g/t gold. A previous float sample of vein quartz assaying 7.8g/t gold
has been sourced to Backyard.
The vein series at the Backyard prospect comprises at least 17 veins varying in width
from a few centimetres to 1.2 metres with associated quartz boulders up to 2.5 metres
in width. The zone has now been mapped over a strike of approximately 600 metres.
To date only the western part of the quartz veins have been sampled to any degree.
The vein series is approximately 150 metres wide in a north-south direction.
Approximately 2 kilometres to the west of Backyard Aurora recently announced
discovery of a gold–in-soil anomaly from its surface work at the new Toolshed
prospect, and recent work at the Te Mata prospect, located approximately 10 kms to
the south of Backyard and Toolshed, is also showing encouragement with the
identification of quartz veins and gold pathfinder elements in surface soil and rock
samples.
Land Access Agreements
Aurora Minerals is also pleased to announce that as part of the joint venture
negotiations the Hazelbrook Joint Venture has concluded land access agreements with
the landowner (Emerald Farming Limited) and with the occupier (Emerald Farming’s
contract dairy farmer) over Emerald Farming’s large 550ha dairy farm. This farmland
includes all of the current area of the Backyard Prospect. Under these land access
agreements the landowner and occupier agree to allow the joint venture to drill the
Backyard Prospect and to undertake development in the event of an economic
discovery.
Terms of the landholder agreement include an option for the joint venturers to buy or
take a licence over the land for a price based on fair market value and a minerals
production royalty, which must be exercised if the Hazelbrook JV discovers an
economic deposit and wishes to mine it.
Aurora engaged one of New Zealand’s leading legal firms to advise on the joint
venture agreement and land access agreements including legal and tax aspects and this
process has been extensive in the preparation of the documents.
Drilling at Backyard remains subject to satisfying the other requirements of the
Resource Management Act and Crown Minerals Act.