The La Pepa Project is located in Atacama Region III, Chile, approximately 800 km north of Santiago, at 4,200 metres above sea level, in the Andes mountain range, approximately 110 km east of the city of Copiapó, capital of the Atacama Region, which is known worldwide for its geological anomalies that contain important gold, copper, lithium, and other mineral deposits. It is 100% owned by Minera Cavancha, a company currently 100% owned by Yamana, and which is intended to be the joint venture company in accordance with the La Pepa Option Agreement.
Pursuant to the La Pepa Option Agreement, the Company is entitled to earn an initial 20% interest in the La Pepa Project by incurring an aggregate of US$5.0 million in qualifying expenditures and delivering a notice of exercise to Yamana and Minera Cavancha within a two-year period from July 2, 2019, the effective date of the La Pepa Option Agreement. To earn an additional 31% interest, the Company must (i) deliver notice of its intention to proceed with its second option concurrently with its notice of exercise of the first option, failing which the second option will expire, (ii) incur an additional $15 million of qualifying expenditures on the La Pepa Project, including expenditures directed toward the completion of a NI 43-101 compliant Feasibility Study, and deliver a notice of exercise of the second option within two years of its exercise of the first option; and (iii) pay $5 million in cash to Yamana. If the Company exercises its option to earn a 51% interest, the Company may acquire the remaining 49% interest at fair market value, which will be determined pursuant to an agreed-upon formula and to be calculated by independent valuators. The Company is the operator under the La Pepa Option Agreement.
The Company is focused on the exploration of a telescoped porphyry-style gold system at the La Pepa Project, which is similar to several other gold systems in the Maricunga Gold Belt. There are two styles of auriferous mineralization on the La Pepa Property. The first corresponds to gold disseminated in stockwork of quartz-magnetite ± pyrite of the porphyry gold–copper type, hosted in the Cavancha deposit. This style of mineralization is the focus of present exploration efforts on the property. The second type consists of structures associated with high-sulphidation epithermal replacement veins, which are commonly called "ledges". The auriferous mineralization in the dacite subvolcanic rocks is associated with a system of quartz veins in the form of stockworks or subparallel sheeted veins.
In a Yamana press release dated February 11, 2021, at a 0.3 g/t Au cut-off grade for potential open pit resources, the measured and indicated resources of the La Pepa Project as of December 31, 2020 contained 2,760,000 ounces of gold in 149,432,000 tonnes at an average grade of approximately 0.57 g/t Au and a further 620,000 ounces of gold hosted in 37,900,000 tonnes of inferred resources grading 0.5 g/t Au. The estimate was prepared in accordance with CIM definitions standards.. Mineros is in the process of completing further work in order to update the Mineral Resource estimate that will incorporate the new drilling results, in coordination with Yamana. During 2019, the Company performed detailed surface mapping on 7.6 km2 of, remapping drilling and geophysical surveys. This compilation exercise generated drilling targets.