African Energy Metals has entered into an option agreement to acquire a 100% interest in the Niñobamba advanced gold-silver project in Peru from Rio Silver.
The agreement allows African Energy Metals to earn full ownership upon exercising the option.
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Under the agreement, African Energy Metals will pay C$260,000 in the first year and up to $2m, including $500,000 as advance royalty payments.
Rio Silver will receive a 2% net smelter return (NSR) royalty, with an option for African Energy Metals to buy back 1% for $1m before commercial production.
The agreement also includes issuing 2,500,000 million common shares of African Energy Metals to Rio Silver upon regulatory approval and another 2.5 million shares by 15 May 2026.
African Energy Metals can opt to issue shares for 50% of any cash payment obligations.
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By GlobalDataA $10,000 non-refundable deposit was paid by African Energy Metals when the agreement was executed.
Rio Silver will offer operational support and make its facilities in Peru available for at least one year, at no cost to the project.
The agreement, including share issuances and payments, is subject to approval by the TSX Venture Exchange and the NEX Exchange.
Rio Silver remains an independent party to African Energy Metals.
African Energy Metals executive chairman Stephen Barley said: “We are very excited to announce this transformational agreement. Through the high-quality work completed by Rio Silver, Newmont, AngloGold, Bear Creek and Southern Peru Copper, we are starting with a significant amount of technical information, which will allow us to continue a productive work programme with a high level of confidence.”
Situated in the Department of Ayacucho in South Central Peru, the Niñobamba project covers an area of 4,100 hectares.
The project is comprised of two mineralised areas: the Niñobamba area and the Jorimina zone. The surface rights are controlled by two separate communities, one in each of the project areas.
Rio Silver has negotiated a surface access agreement with the local community, facilitating a first phase diamond drilling programme at the Jorimina Zone.
A diamond drilling permit is expected to be secured during the first quarter of 2025.
