Ann: Option Agreement for Joint Venture Signed, page-32

My 20 cents worth began with this speculation as to what might be announced after:

........  an "Annus Horribilus" for the share price and the resultant loss of confidence in management (chicken and egg conundrum as to which came first). 

Some consider that Rio/Kex are getting in on the cheap and they probably are. 

However, what palatable alternatives existed after the non events of 2018?    Dr. Lindsay's (NL) estimate of up to $500M to proceed to a mine always, in my mind, meant dilution of ownership

From post on AGM 2018: Capex?  NL mentioned a figure of some 10-15K $US per tonne for the type of deposit above - implies some $2-500M US.  Some deal, strategic partner or sale is obviously needed by a company of VAL's size.   If it gets anywhere towards this then VAL will probably be re-rated to a somewhat higher SP.

This "Farm In" agreement gives VAL some time and at least $700K of funds that would have been expended to keep Berenguela.  The decisions are complex and faced by many small explorers who don't have the funds to test the difficult to find Tier 1 targets that may be below the small resource they have found.

Rio take advantage of this type of situation when it meets certain internal criteria.  I have followed it with AZS and AZY and would make these observations.

• Rio meet the early expenditure requirements and make tough decisions to pull out if results aren't satisfactory.
• They employ state of the art technologies and geological models - as would be expected.
• The interest in Berenguela may be the first move into a major mining district in SE Peru.  (E.G Paterson Province in WA.)
• Rio and/or KEX can limit news flow dramatically (e.g. AZS Promontorio, Winu). 
• There are numerous frustrated HC posts about this practice (mainly AZS) so I wish the more open approach taken with AZY will be the case for VAL in 2019 and hopefully for a few years into the future. 
• What is material for Rio is 10+- years in the expenditures of the likes of VAL, AZS, and AZY and this clause appears to be used freely when they wish.

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It is no secret South America is the home of many of the world's Tier1 mines so companies positioning themselves to own or find something comes as no surprise.

Regional major mines:

These images put Berenguela into geographical and metallogenic context.  Distances are vast relative to the dimensions of individual deposits.  Solgold's success to the north in Ecuador has attracted two majors and another company made the Canadian "The Northern Miner" such that I looked to see how it related to Berenguela. 

Not close but these claim maps show many major companies already in the extended region.

  Berenguela is just off the SE corner of this map:

Another weekend article in the West Australian shows the South American focus of another (recently merged) company (Barrick).

I highlighted Zaldivar because of its close proximity to one of the real Bull Elephant's -Escondida (BHP (57.5%)/RIO!(30%))

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Rio at Berenguela?

• Due diligence and compilation of previous work.
• From past research I suspect there is much more exploration/geophysical data available to them than to the general public.  Pretty much a given but worth noting.
• The primary target is likely to be "blind" intrusives that are causing the surface Mn, Cu, Ag etc mineralisation in limestones at surface.
• IP or appropriate geophysical surveys over Corona West, ?Corona, Berenguela, and ?? other areas to focus on targets for drilling.  3-6 months with weather, permitting, land access etc constraints followed by drilling 2-3 months and results out in Q4 2019.
• These are not easy targets and the land holding is quite large so good science needs to be combined with a modicum of luck.
• Even if Rio provide regular updates there isn't anything obvious to boost the SP in the near term. 
• NL was very keen on exploring and ?drilling Corona West at the AGM so a few "wildcat" holes into early geophysical targets, though unlikely for Rio, is one pie in the sky dream.

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VAL?

• pre feasibility will chew up most of the funds so the $700K earmarked for SSR and now paid by Rio gives them something to take a look at Picha. 
• NL said they would try to generate other projects - they haven't really been able to handle Berenguela so out of the frying pan and into the fire???
• I haven't expected too much from VAL since they announced the suspension of exploration last year - and a 50% reduction in some director's fees.  Not easy to be upbeat about anything but the resource and potential so while we are stuck with the board they do have experience which appears to be translated into this deal that keeps VAL alive, if barely, to potentially rise from the ashes.

GLTAH