Diablillos Silver/Gold Project

On March 1, 2019 Aethon entered into a binding letter agreement with AbraPlata Resource Corp. ("AbraPlata"), whereby Aethon will have the exclusive right for a period of approximately five months to: (i) perform technical due diligence on AbraPlata's Diablillos silver-gold project (the "Project") in Argentina and (ii) negotiate with AbraPlata the terms of an option or other transaction whereby Aethon could acquire a 50% or greater interest in the Project. 

The Diablillos project is located in the mining-friendly province of Salta in northwestern Argentina, approximately 150 km southwest of the city of Salta. The Project comprises nine mineral leases acquired by AbraPlata in 2016 from SSRM (formerly Silver Standard Resources Inc.), with multiple known occurrences of epithermal gold-silver mineralization. Exploration work, conducted by a number of operators over the history of the Project, includes approximately 88,000 meters of diamond and reverse circulation drilling in over 475 holes. This drilling has delineated the Oculto and Fantasma deposits, which are weathered high-sulphidation epithermal gold-silver deposits. 

Historical Mineral Resource estimates for the Oculto and Fantasma deposits on the Diablillos property, based on a technical report dated April 16, 2018, are summarized below. Aethon is reporting the mineral resource as a Historical Estimate per NI 43-101 – Standards of Disclosure for Mineral Projects. A qualified person for Aethon has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. Aethon is not treating the historical estimate as current mineral resources or mineral reserves.

Table 1 – Diablillos Historical Mineral Resource Estimates 


(000 oz Ag)

(000 oz Au)


1. Full details of the historical mineral resource estimates can be found in a report by RPA Inc. titled "Technical Report on the Diablillos Project, Salta Province, Argentina" dated April 16, 2018. This report can be found under AbraPlata's profile on www.SEDAR.com. It is believed that minimal work would be required to upgrade or verify the historical estimate as current mineral resources.
2. CIM definitions were followed for Mineral Resources.
3. Mineral Resources are estimated at a cut off grade of 40 g/t AgEq for Oculto and 40 g/t Ag for Fantasma.
4. Mineral Resources are estimated using long-term metal prices of US$1,500/oz Au and US$23/oz Ag.
5. Average bulk density is 2.22 t/m3 for the Indicated category and 2.29 t/m3 for Inferred for Oculto and 2.00 t/m3 for both Indicated and Inferred categories for Fantasma.
6. The estimate was constrained by pit shells for both Oculto and Fantasma.

Highlights of the Project

  • The Diablillos project contains a historical estimate of Measured and Indicated Resources of over 80 million ounces of silver and 730,000 ounces of gold, or 142 million silver-equivalent ounces at spot prices. Mineralization remains open at depth with excellent potential for extensions of high grade mineralization. 
  • Aethon and AbraPlata believe exploration potential exists to increase resources significantly, especially gold resources. Hydrothermal breccias at Oculto extend into the basement and have strong potential for high grade gold mineralization and to date have been largely untested.
    • Notably, DDH97-007A intersected 108m of 2.7 g/t Au from 197m down hole, including 10.6m grading 16.7 g/t Au from 210m.
  • With funding from Aethon, the main Oculto deposit at Diablillos will be categorized into geometallurgical domains based on re-logging and structural geology work done by AbraPlata. A metallurgical test work program will be conducted on existing samples with the aim of optimizing the flowsheet for the Project and estimating silver and gold recoveries. This work is expected to take three to four months.

Transaction Summary

The following is a summary of the principal terms of the Agreement:

  • Aethon shall have the exclusive right until July 26, 2019 (the "Exclusivity Period"), to complete its due diligence and negotiate the terms of, and enter into an option agreement (the "Option Agreement") with AbraPlata, pursuant to which Aethon can earn a 50% interest in the Project.
  • In consideration for the Exclusivity Period, Aethon agrees to make an upfront payment of USD$50,000 to AbraPlata.
  • By June 28, 2019, Period, Aethon will spend a minimum of USD$150,000 on expenditures in connection with a metallurgical testing program and other related test work to be carried out on the Project.

If Aethon fulfills the above covenants and elects to exercise the Option by fulfilling the conditions, Aethon and AbraPlata shall negotiate the Option Agreement. On exercise of the Option, Aethon shall:

  • issue to AbraPlata the number of Aethon common shares that would result in AbraPlata owning 9.9% of the then issued and outstanding Aethon shares; and
  • subscribe, by way of a private placement, for a number of AbraPlata common shares that would result in Aethon owning 9.9% of the then issued and outstanding AbraPlata shares. The subscription price per AbraPlata share to be issued shall be equal to the greater of (i) the closing market price of AbraPlata on the day that the Option is exercised, and (ii) CAD$0.06.

AbraPlata also has written assurances from SSRM that it will forbear from enforcing payment of an outstanding NSR royalty payment until October 31, 2019, provided no further event of default occurs, and that it would consider providing its agreement to delay property payments of USD$5 million and USD$7 million by up to four years under certain circumstances, including a merger of Aethon and AbraPlata, provided that it is satisfied with the definitive transaction terms and the provision of such security and other assurances as it determines to be necessary or desirable to protect and preserve its rights and interests, and it receives certain additional consideration.

Investors are cautioned that there is no assurance that Aethon and AbraPlata will successfully negotiate an Option Agreement or other transaction whereby Aethon would acquire an interest in the Project or that any such transaction, if successfully negotiated, would ultimately be consummated.

Next Steps

Aethon's first phase program on the Diablillos Project will have several objectives, including:

  • A review of the drill data on the Oculto zone to determine how representative the sampling for metallurgical testing of the open pit resource silver dominant zone has been. This review will determine whether additional sampling/metallurgical testing is required for the open pit scenario and, if so, additional test-work will be completed;
  • A review of additional epithermal style gold dominant resources within the Diablillos project area in preparation for future reconnaissance drilling; and
  • A review of historical drill data to determine if higher grade silver and gold zones could potentially be exploited using underground mining methods.