Auteco Minerals (AUT) has signed an agreement with First Mining Gold to acquire an 80% stake in the Pickle Crow gold project in Ontario, Canada.

To acquire the stake in the project, Auteco has to spend approximately C$10m ($7.5m) in exploration expenditure for five years.

First Mining said that it will retain a 2% net smelter return (NSR) royalty, of which 1% can be bought back for $2.5m.

Located in Northwestern Ontario, the Pickle Crow project is a high-grade gold mine, which produced nearly 1.5 million ounces of gold at an average grade of 16.14 g/t when it was operated from 1935 to 1966.

First Mining CEO Dan Wilton said: “This agreement allows the company and our shareholders to retain an interest in Pickle Crow’s advancement as the Auteco team works to define the project potential through drilling and exploration while First Mining’s near-term focus remains on advancing our Springpole and Goldlund gold projects.”

First Mining acquired Pickle Crow project in 2015

The project was acquired by First Mining in November 2015 through the acquisition of PC Gold.

Subject to the execution of a formal agreement, which is expected to be finalised within 45 days, a payment of C$50,000 ($37,945.5) in the form of cash will be paid to First Mining.

Furthermore, AUT will also issue 25 million shares to First Mining.

During the stage 1 earn-in, which is a three-year initial earn-in period to acquire a 51% interest in the project, Auteco will have to spend C$5m ($3.79m) with a commitment of C$750,000 ($569,182) to be spent during a 12-month period.

For an additional 19% stake under stage 2 earn-in, the company will have to invest further C$5m ($3.79m) on exploration and make a C$1m ($0.75m) cash payment to First Mining within 90 days of completing the additional exploration spend.

First Mining said that after completing stage 2 earn-in, Auteco will have an option to acquire a further 10% for C$3m ($2.27m).