Latin Metals Inc. has entered into an earn-in agreement with a wholly-owned subsidiary of Barrick Gold Corp.
Under the terms of the earn-in agreement, Barrick has the right to acquire up to an 85% interest in the company’s Cerro Bayo, Cerro Bayo Sur, and La Flora properties, located in Santa Cruz Province, Argentina. Barrick’s earn-in right consists of an initial option to acquire a 70% interest in the properties and a second option to acquire an additional 15% (aggregate 85%) interest.
The properties are currently subject to an underlying option agreement, dated 7 February 2019, as amended, pursuant to which Latin Metals has the right to acquire an ultimate 100% interest in the properties.
To exercise the First Option and earn a 70% interest by the seventh anniversary of the Effective Date (defined below) of the earn-in agreement, Barrick must:
- Make cash payments totalling US$2.3 million, pursuant to the underlying option agreement.
- Make cash payments to Latin Metals totalling US$750 000 (inclusive of US$150 000 on the Effective Date).
- Incur exploration expenditures with respect to the Properties totalling US$5.0 million, of which US$1.0 million is a binding commitment (work or cash in lieu) to be spent before the second anniversary of the Effective Date.
- Prepare and deliver to Latin Metals a Preliminary Economic Assessment prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
To exercise the second option and earn an additional 15% interest by the ninth anniversary, Barrick must:
- Make additional cash payments to Latin Metals totalling US$425 000 (aggregate US$1.1 million).
- Sole fund all costs and deliver to Latin Metals a Prefeasibility Study prepared in accordance with NI 43-101.
The binding nature of Barrick’s expenditure commitment does not become effective until the parties have entered into an agreement with the underlying property owner to acknowledge Barrick’s rights under the earn-in agreement and authorise Barrick to conduct operation on the properties (the Effective Date). In the event that such agreement is not reached within 60 days of executing the earn-in agreement, Barrick may terminate the earn-in agreement immediately upon notice to Latin Metals.
Barrick may at any time during the term of the earn-in agreement accelerate the timing for payment of any or all cash payments to Latin Metals and the underlying owner of the properties, delivery of technical studies, and incurring exploration expenditures.
Keith Henderson, President and CEO of Latin Metals, comments:
“Barrick is a good partner who bring considerable technical and financial capability to the project.
“Assuming that the earn-in agreement runs to full term, Barrick’s investment of around US$8.5 million will include payments to the underlying vendor, payments directly to Latin Metals and funding of work on the ground; all of which will help to limit dilution to Latin Metals’ shareholders.
“The earn-in agreement is consistent with the company’s prospect generator model, and the work contemplated, if successful, would advance the projects considerably, while Latin Metals will retain a minority interest.”