Mandalay Resources Corp. officials have announced the purchase of the past-producing Challacollo silver property in northern Chile from Silver Standard Inc.'s Minera Silver Standard Chile S.A. subsidiary. The final transaction, pending Q1 2014, includes $7.5 million in cash and 17 million in Mandalay shares.

Due diligence, according to officials, has yielded 8 million silver oz. indicated and 25 million silver oz. inferred; CEO Brad Mills, meanwhile, spoke of a “significant growth to our assets” and that “with its well-established resource, existing infrastructure, significant exploration potential and timeline to production, Challacollo meets all acquisition criteria.”

Challacollo is an epithermal deposit in northern Chile 130 km southeast of Iquique port, said Mandalay. The Pan-American Highway passes 30 km to the west, and power lines, which also service nearby mines including Collahuasi and Quebrada Blanca, lie within 30 km. The project is within a metallogenic belt paralleling the Chilean coast that includes the Cerro Colorado porphyry copper deposit and the El Peñon epithermal gold deposit.

The largest vein with the entire resource is the Lolón Vein more than 3.5 km in length with width  up to 30 meters and an average width of 9 metres within its drilled length. Mandalay intends to begin a feasibility study upon the transaction’s Q1 2014 closing with anticipated completion in Q4.

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