Cave Peak Prospect, Culberson County, Texas (Molybdenum)
Cave Peak is considered one of the best and highest grade, undeveloped molybdenum prospects in the U.S. Last year Quaterra signed an earn-in agreement with Freeport-McMoRan Mineral Properties Inc. ("FMMP") of Phoenix, Arizona, in respect of Cave Peak.
In the terms of the agreement, FMMP has the exclusive right and option to acquire a 70% ownership interest in the Cave Peak project by paying 2011 land holding costs on behalf of the Company and by subsequently spending US$5 million on exploration over four years ending in 2015. Except for the 2011 land holding costs, which are a firm commitment, all other exploration expenditures are optional.
Upon FMMP earning a 70% interest in the Cave Peak project, the parties have agreed to joint venture further exploration and, if warranted, development of the Project on a 70/30 basis with FMMP either funding Quaterra´s share of costs through to delivery of a bankable feasibility study or converting its interest to a 1% net smelter returns royalty if it determines not to deliver such a feasibility study. The joint venture will be on standard terms including dilution for failure to contribute a party´s share of costs. FMMP will be the initial operator under the joint venture.
The Cave Peak property covers 523.7 acres located 35 miles north of Van Horn in Culberson County, Texas, and includes all or parts of three breccia pipes, one of which was drilled in the 1960s by Union Carbide Corporation and contains significant molybdenum mineralization. Union Carbide Corporation began a core drilling program on the property in 1965 and completed over 40,000 feet of diamond drilling in 26 holes before selling the property to Draco Mines in 1975. Draco Mines and related companies drilled a few more holes and performed metallurgical test work on the oxidized molybdenum mineralization before relinquishing the property in 2001.
