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US copper giant Freeport-McMoRan has given its backing for Max Resource’s (TSXV: MAX) flagship Cesar copper-silver project in northwestern Colombia, with the companies entering on Monday an earn-in agreement.
Under the agreement, Freeport’s exploration-focused affiliate is granted a two-staged option to acquire up to an 80% interest in the Cesar project by spending a cumulative total of C$50 million on exploration and paying C$1.55 million cash to Max.
The first stage is an initial 51% interest that requires C$20 million in exploration funding commitments on Cesar and a C$800,000 cash payment; Max will remain the project operator during this stage. In the second stage, Freeport can earn an additional 29% by funding a further C$30 million in exploration over five years and making payments totalling C$750,000.
Shares in Max Resource fell 26.2% to C$0.16 apiece by 11:20 a.m. ET on the earn-in agreement announcement. This gives the Vancouver-based copper junior a market capitalization of C$27.3 million ($20 million).
“Careful consideration was given in selecting the best suited earn-in party for Cesar, and access to Freeport’s global team and expertise is aimed at unlocking Cesar’s potential. Freeport has a track record of global copper discoveries that have proceeded to mine development and production,” stated Max CEO Brett Matich in a press release.
The Cesar project is situated along the copper-silver-rich Cesar Basin. This region provides access to major infrastructure resulting from oil & gas and mining operations, including Cerrejón, the largest coal mine in South America, held by Glencore.
Having first identified its district-scale potential, Max has now assembled a land package that spans more than 1,150 km of geology prospective for sedimentary-hosted copper and silver deposits. The property contains 20 mining concessions covering a total of 188 sq. km.
“The Cesar project is host to one of the world’s largest underexplored sedimentary copper-silver systems, and we believe Freeport’s endorsement of the Cesar project is a testament to its potential for hosting a world class deposit,” Matich added.
To date, Max’s exploration team has identified and is evaluating 28 targets across three continuous districts spanning a 120-km belt.
