The Escondida project is located 55 kilometers northwest of the city of Copiapo, Chile and 15 kilometers from the Pan American Highway. The project covers nearly 2,500 hectares of coastal plain in Region III.
Mineralization is contained within a Tertiary age sedimentary rock sequence, the upper portion of which is poorly consolidated. The sedimentary rocks are intermittently exposed along a NE-SW six-kilometer trend, most prominently to the SW, where erosion has exposed the sedimentary sequence to depths of up to 15 meters. The depth of the sedimentary rock was further tested in 2008 with two reverse circulation drill holes, placed 400 meters apart, perpendicular to the inferred mineralized strike. RC#1 was drilled to 100 meters, ending in sedimentary rock, whereas RC#2 hit rubble from the underlying batholith at 85 meters.
Two previous phases of initial exploratory trenching determined that along much of the trend, the mineralized sedimentary rocks are only a few meters depth from the surface. The top meter or so of the sediments are a richly oxidized red as seen in Figure 1 below. A perched water table protects the underlying sulfides from oxidation.
Mineralization within the sedimentary rocks consists of gold and silver associated with finely disseminated base metal sulfides. Limited sampling and processing in the on-site pilot plant indicates gold and silver can be extracted from the sedimentary rocks.
Joint Venture AgreementZoro previously entered into an earn-in agreement with Llanos de Caldera, S. A. Cerrada (“Llanos”), a privately held Chilean corporation, for participation by Llanos in the Escondida project. The agreement grants Llanos a one-year period during which to act as operator and expend US$500,000 in qualifying expenditures at the project, constituting an initial exploration program and including drilling, sampling analytical and metallurgical test work. With Zoro’s consent, Llanos subsequently assigned its rights in the earn-in agreement to the Escondida Chile Joint Venture, a partnership between Llanos and the HEI Escondida Joint Venture.
At the end of this period and upon expending the requisite amount, the Escondida Chile Joint Venture will have satisfied its earn-in requirements and acquires an undivided 70% of the Escondida project. Upon earn-in the parties have agreed to form a joint venture in accordance with the Rocky Mountain Mineral Law Foundation standard format and execute a joint operating agreement whereby the Escondida Chile Joint Venture will be the operator, and the parties shall fund their respective shares of expenses going forward.
Llanos is a privately held Chilean corporation funded by venture capitalists resident in the United States. The HEI Escondida Joint Venture is a general partnership based in Colorado consisting of multiple partners and a managing partner, HEI Resources, Inc.