Big Ridge Gold has signed a non-binding letter of intent (LOI) with Caprock Mining, setting out the terms of an option for the latter to acquire the Destiny Gold Project in Quebec, Canada.

Situated 75km north-east of Val d’Or, the project could see Caprock acquiring a 100% interest through a series of cash payments, share issuances and exploration commitments.

Under the agreed terms of the LOI, Caprock is required to issue eight million common shares upon closing, followed by incremental cash and share payments over a three-year period totalling $750,000 (C$1m) in cash and $1.3m in shares.

Additionally, Caprock must incur exploration expenditures of $2.45m over the term of the option agreement.

Upon completion, Big Ridge will retain a 1% net smelter return royalty on the property. Caprock holds the option to buy back this royalty for $1m.

The companies are yet to finalise a definitive option agreement.

Shares issued to Big Ridge by Caprock as part of the agreement will be subject to a four-month statutory hold period.

The Hope Brook Gold Project, another asset of Big Ridge, is a high-grade gold project with a history of significant production.

Located 85km east of Port aux Basques, Newfoundland, Hope Brook produced more than 752,162oz of gold between 1987 and 1997.

The project underwent various production phases including open-pit mining, heap leach and conventional cyanidation milling methods, with copper recovery added later.

Big Ridge president and CEO Mike Bandrowski said: “We are excited to work with the Caprock Mining team and believe there is significant potential in the Destiny Gold Project.

“With the recent move in the price of gold and renewed attention coming into the precious metal exploration space, we believe this is the perfect time to see the Destiny Gold Project move forward. Caprock’s exploration team has advanced several world-class projects in North America and is the right team to champion the Destiny Gold Project.”