Solitario Exploration & Royalty Corp. has signed a binding letter of intent (LoI) with Minera Hochschild México, a 100%-owned subsidiary of Hochschild Mining plc, on Solitario’s 100%-owned Pachuca Norte silver-gold project in central Mexico. The Pachuca Norte project encompasses approximately 19,000 ha of mineral rights in and around the historic Pachuca silver-gold mining district. Historic production from the district totals approximately 1.4 billion oz of silver and more than 7 million oz of gold, making it one of the largest silver-gold districts in the world.
Per the terms of the binding LoI, Hochschild can earn a 51% interest in the project by spending a total of $10 million on exploration over a five-year period. The initial 12-month work program of $1.5 million is a firm commitment. Later optional commitments are $500,000 18 months from signing, $3 million 36 months from signing, and $5 million 60 months from signing.
Hochschild will have the right to earn an additional 19% (total 70%) by completing a positive feasibility study for the project. Upon signing a definitive agreement, expected in early April 2013, Hochschild will become project manager and will have the right to terminate the agreement at any time following its firm initial work commitment.
Newmont, from 2006–2008, and Buenaventura, from 2010–2011, conducted exploration programs on the Pachuca Norte property. Newmont identified 38 high-quality drill targets consisting of high-grade silver-gold veins that are distributed over a geographic area measuring 20 km by 10 km. Newmont drilled 19 holes totaling 7,873 m. Buenaventura expanded on Newmont’s work and drilled 38 holes totaling 13,489 m.
Hochschild has indicated that its initial 12-month work program will be focused upon testing a number of these already well-defined drill targets.