Jaguar Mining announced Wednesday it has signed an option agreement with Iamgold on a package of 28 exploration tenements covering an area of over 270 sq. km in the Iron Quadrangle of Minas Gerais, Brazil.
Under the agreement, Jaguar has the option to earn an initial 60% interest in the land package by spending US$6 million on exploration over four years beginning in the third quarter. The company is required to spend a minimum of US$500,000 per year during the earn-in period, and the exploration program must include at least 5,000 metres of diamond drilling.
Upon Jaguar vesting an initial 60% interest, Iamgold may elect to fund its pro-rata share of ongoing expenditures under a conventional 60-40 joint venture, which would be formed for this purpose.
The Iron Quadrangle has been an area of mineral exploration dating back to the 17th century and contains world-class gold deposits such as Morro Velho, Cuiaba and Sao Bento. Jaguar currently holds the second-largest gold land position of the producers in the region, at just over 350 sq. km.
“The Iron Quadrangle agreement with Iamgold will serve to enhance and expand Jaguar’s strategic focus, where we already have an impressive footprint with the Turmalina and Pilar operating gold mines and the Paciencia mill which has been in care and maintenance since 2012 ,” Jaguar Mining CEO, Vern Baker, stated in the release.
According to Jon Hill, VP geology and exploration, there is a “multitude of historical mines and mineralized occurrences” within the area, and existing data and ongoing work have shown indications of “Tier 1 potential targets.”
Shares of Jaguar Mining jumped 7.7% by 1:20 p.m. EDT on the option agreement announcement. The Toronto-based miner has a market capitalization of $607.7 million.
This story originally appeared on www.Mining.com.