Estrella Gold Corporation (TSX VENTURE:EST) is pleased to announce that following the recent expiration of our Alliance Agreement with Cliffs Natural Resources Exploration Inc., a wholly owned subsidiary of Cliffs Natural Resources Inc. (NYSE:CLF)(PARIS:CLF) Cliffs has decided to fund additional exploration work on the Henry Sur property. The Henry project was identified as a “Target” under the Alliance Agreement with Cliffs in 2012 and is comprised of 16 concessions totaling 11,600 ha.
Mr. John R. Wilson, President and CEO of Estrella, commented, “We are pleased with the results of our initial exploration work at Henry Sur and believe that the property may offer the potential for the discovery of a major copper skarn system with by-product gold, zinc and lead. Continuing work with Cliffs on this project offers the potential for increasing Estrella shareholder value, and we look forward to additional encouraging news in the coming months.”
The Henry Sur property is located in Departamento Ica approximately 30 kilometers east of the town of Chincha, and planned 2013 work on the project will be fully funded by Cliffs. The planned program is expected to commence in July of 2013, and Estrella will continue to act as the project manager. Planned work will consist of additional reconnaissance and detailed geological mapping and geochemical sampling.
Geologically, the prospect is comprised of limestone and clastic sedimentary rocks which has been intruded by Cretaceous granodiorite (Coastal Batholith) and locally diorite. In the western portion of the Henry Sur concession block, the older rocks are overlain by a younger, presumably post-intrusive, andesitic volcanic unit. The limestone and clastic sequence trends northwesterly and is up to 5 km. wide and a minimum of 15 km. long. The sedimentary sequence probably represents a mega roof pendant within the coastal batholith, and it is estimated to be a minimum of 300 meters thick.
Mapping to date has identified approximately 20, relatively small, garnet-(+/-pyroxene) skarn zones on the Henry Sur prospect. These skarn bodies almost always occur at the contact between the limestone and the adjacent granodiorite, and they range from a few meters to 35 meters wide and up to 350 meters long.
To date, a total of 96 surface rock-chip samples have been collected from the Henry Sur prospect. The majority of these were taken within the contact zones/skarn zones between the sedimentary sequence and the adjacent granodiorite. Within the garnet skarn bodies locally anomalous Au (up to 0.261 ppm), Cu (up to 9.3 percent), Zn (up to 6.7 percent), and Pb (up to 7.1 percent) were detected.
Based on the work completed to date, it appears that potentially significant, skarn-related copper mineralization may be present on the Henry Sur concession block. Although the known surface mineralized skarn bodies appear to be small, it is possible that larger bodies of mineralized skarn may occur at depth along the limestone-granodiortie contact. Additionally, much of the favorable limestone-granodiorite contact has yet to be fully reconnaissance mapped and sampled, and it is possible that larger, currently unknown, outcropping, mineralized skarns may occur in these areas.
Estrella’s Alliance Agreement with Cliffs, which established Estrella as the operator and was initially focused on the discovery of IOCG-type Cu-Fe+/-Au deposits, was terminated upon the expiration of the two-year term. Nonetheless, the parties have determined that Henry Sur will be treated as an “In-Process Project” under the Alliance Agreement terms to determine if the prospect can be upgraded to a “Property of Merit”. If Henry Sur becomes a Property of Merit and it is accepted by Cliffs, then Henry Sur will become a Joint Venture Project (“Project”) with Cliffs and Estrella each owning an initial 50% interest.
Cliffs can then acquire an additional 20% interest in Henry Sur, to a total 70% interest, by spending a minimum of US$4,000,000 and completing 3,000 meters of drilling within four years of selection. If accepted as a Project, Cliffs will be required to expend a firm commitment of US$500,000. If Cliffs does not acquire the additional 20% interest, the property reverts 100% to Estrella, subject in certain circumstances to a potential NSR royalty in favour of Cliffs. Upon earning 70% interest, Cliffs can acquire an additional 10% interest to a total 80% interest in Henry Sur by completing an NI 43-101 Compliant Pre-Feasibility Study or by defining a compliant Mineral Resource containing a minimum of 1,000,000, ounces of gold or gold equivalent, within four years of earning its 70% interest. If Cliffs elects not to earn an additional 10% interest, Cliffs will pay Estrella US$2,000,000 within 60 days and the parties will fund their proportional interest, subject to conventional dilution. If either party’s interest in the Project is reduced to 10%, that interest will be convert to a 2% NSR royalty.
About Estrella Gold Corporation
Mineral exploration is inherently risky and Estrella increases the chances of success as a “Prospect Generator” focused on gold exploration in Latin America. Estrella identifies and acquires new mineral properties, conducts initial, low-cost exploration to define a potential new deposit and then forms joint ventures with other companies that will provide funding for more advanced exploration. Estrella has four properties optioned out or held in joint venture agreements. The Company has 31.6 million shares issued and outstanding, and is listed on the TSX Venture Exchange.
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We acknowledge the [financial] support of the Government of Canada.