Ltd () has signed a deal which could result in Canadian copper producer Inc. () (NYSE:HBM) obtaining 70% of the Llahuin Copper-Gold Project in Chile.

An option agreement has been signed by the company’s subsidiary Minera Llahuin SCM with Hudbay’s subsidiary HudBay Chile SpA.

The agreement provides a path for Hudbay Chile to earn a 70% interest in the Llahuin Project by making a series of cash payments totalling US$5.8 million over five years.

Exploration commitment

It also involves Hudbay Chile committing to spend a minimum of US$3.5 million on exploration over the first three years.

A cash payment of US$50,000 was paid by Hudbay Chile to Minera Llahuin upon execution of the option agreement.

Llahuin is a highly prospective copper-gold project close to the city of Illapel in the Coquimbo Province, 250 kilometres north of Santiago.

Measured and indicated resource

The project has a measured and indicated resource of 149 million tonnes at 0.29% copper, 0.12 g/t gold and 0.008% molybdenum, or 0.41% copper equivalent.

It also has an inferred resource of 20 million tonnes at 0.20% copper, 0.19 g/t gold and 0.005% molybdenum, or 0.36% copper equivalent.

There is an opportunity to grow the resource, which is mainly from the Central Porphyry Zone, particularly from the Cerro de Oro and Ferrocarril zones.

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