Atlantic Metals, a subsidiary of Moxico Resources, has signed a binding letter of agreement with mineral exploration company Latin Metals to earn a 75% interest in two copper exploration projects in Argentina.
The agreement provides Moxico with the option to acquire stakes in Latin Metals' Esperanza copper-gold porphyry exploration project and Huachi copper exploration project.
To exercise this option, Moxico must meet various financial and operational milestones including staged payments and drilling commitments.
Under the terms of the agreement, Moxico is required to make cash payments totalling $2.78m (£2.12m) to Latin Metals and assume Latin Metals' existing payment obligations of $4.63m to the original owners of the projects.
Additionally, Moxico must undertake $1m in work expenditure commitments at the Huachi project and complete at least 65,000m of drilling across both projects.
It is also tasked with delivering independent technical reports including a mineral resource estimate, a preliminary economic assessment and a bankable feasibility study.
Upon successful completion of these requirements, Moxico will have the opportunity to increase its interest to 100% by making an additional payment to Latin Metals.
This payment will be the greater of $10m or an amount calculated based on the copper equivalent in the measured and indicated resource categories.
Latin Metals president and CEO Keith Henderson said: “The Esperanza project has seen 8,500m of drilling, with Latin Metals’ best drill-hole intersection returning 387m grading 0.57% copper and 0.27g/t [grams per tonne] gold from surface, including 166m grading 0.84% copper and 0.37g/t gold from surface. We look forward to seeing results from the exploration to be completed by Moxico.”
If Moxico exercises this top-up right, Latin Metals will retain a 2% net smelter returns royalty.
The two companies have agreed to negotiate a definitive earn-in and purchase option agreement within 60 days of the first anniversary of the effective date, provided the option has not been terminated.
Following the exercise of the option and subject to the top-up right, Moxico and Latin Metals will form a joint venture, with initial interests of 75% and 25%, respectively, to continue exploring and, if viable, developing and commercialising the projects.
