Orex Minerals, a Canadian mineral exploration company, has signed a letter of intent (Lol) with Exploraciones El Cairo, a Mexico-registered company, to acquire a 100% stake in the Valenciana gold-silver project in Mexico.

The Valenciana property hosts high-grade gold and silver veins at epithermal level with base metals such as lead and zinc in cretaceous sedimentary units.

The LoI is non-binding and the company is conducting negotiations for a definitive agreement.

Such an agreement is expected to have a four-month due diligence period, a scaled option payment and an area of influence, along with 2% net smelter royalty (NSR).

It will also include an additional 0.5% NSR on adjacent properties obtained from third party concession holders, falling under the area of influence.

The property is spread across 277.18 hectares of mineral concessions near the village of Valenciana in the northern Zacatecas state, around 30km from the Nieves mining district.

The central target area is around 2.7km from the main east-south-east Valenciana vein system. There have been signs of early production including old mine shafts, but historic documentation is not available.

There is extensive hydrothermal alteration in the district due to emplacement of the low-to-intermediate sulphidation vein systems, hosted in the Cretaceous sedimentary units.

Pan American Silver and La Cuesta International conducted an exploration programme in 1996. Ten diamond drill holes in the property revealed several base and precious metal mineralised intercepts. These holes yielded 2.19m grading of gold at 2.50 grams per tonne (g/t), silver at 1,115g/t, lead 0.5% and zinc 1.4%.

The company further claims that although the drills pre-date National Instrument 43-101 - Standards for Disclosure for Mineral Projects (NI 43-101) standards, they offer a good guide for potential future exploration programmes.