CYU sign with Rio Tinto for copper exploration projects In Chile

China Yunnan Copper Australia Limitada a Chilean subsidiary of China Yunnan Copper Australia Limited has signed 2 agreements with Rio Tinto Mining and Exploration Chile for options to joint venture covering copper porphyry exploration properties, Palmani and Caramasa in northern Chile.

The Palmani porphyry copper and molybdenum prospect is located in the Palaeocene Porphyry Copper Belt of Northern Chile, 60km northeast of Arica, approximately 5km west of the Palaeocene aged La Mancha porphyry copper system, which was drilled by Rio Tinto in 1997 and 1998. It lies within the same belt of rocks that host the Cerro Colorado porphyry copper deposit and the Toquepala porphyry copper deposit in Southern Peru.

The Caramasa porphyry copper and molybdenum prospect is located in the Palaeocene Porphyry Copper Belt of Northern Chile, 80 kilometers north of BHP Billiton's Cerro Colorado mine. These targets represent potential large Palaeocene age porphyry copper, molybdenum and gold deposits, similar to the Tier 1 porphyries of Southern Peru.

Key components of the two JV are:

1. Palmani: Minimum expenditure commitment for first year USD 250,000. Total expenditures of USD 10 million and 5000 meters of drilling to earn a 40% interest. After exercise of the first option Rio Tinto to have 90 days to elect to resume management of the project or grant a second option for a further 3 years with expenditures of USD 15 million for China Yunnan to gain a further 20%.

2. Caramasa: Minimum expenditure commitment for first year USD 250,000. Total expenditures of USD 8 Million and 5000 meters of drilling to earn a 40% interest. After exercise of the first option Rio Tinto to have 90 days to elect to resume management of the project or grant a second option for a further 3 years with expenditures of USD 15 million for China Yunnan to gain a further 20%.

If CYU exercise the first option for 40% and Rio Tinto decides to take over management and remain at 60% then JV company will be formed and each party will have to contribute its share of expenditure according to its equity share. There will be no free carry for either party. Only if one party does not contribute it will be diluted. CYU can withdraw at any time after meeting the first year expenditure commitment.

Mr Jason Beckton MD of CYU said that “These options to joint venture agreements in the world’s best copper jurisdiction are very important to the stated objective of company maker style exploration in parallel with cash flow initiatives recently announced for Laos. CYU has had exploration success previously in Chile and operations will move quickly toward drilling. Initially some field checking and environmental baseline work will be completed in line with best practice exploration procedure. Subsequent to this within the next quarter, deep drilling on both Caramasa and Palmani will commence. CYU is very excited to work with Rio Tinto Exploration, a Tier 1 partner, in the world’s premier copper district.“