The assets involved in the deal are the Cerro Bayo, Cerro Bayo Sur, and La Flora properties located within the Deseado Massif in Santa Cruz
Barrick Gold gets an option to acquire up to 85% from Latin Metals in certain exploration assets in Argentina. (Credit: Khusen Rustamov from Pixabay)
Latin Metals has signed an earn-in agreement with a fully-owned subsidiary of Barrick Gold to allow the latter to acquire a stake of up to 85% in certain exploration projects in Argentina.
The assets of Latin Metals involved in the deal are the Cerro Bayo, Cerro Bayo Sur, and La Flora properties, all located within the Deseado Massif in Santa Cruz province.
Currently, the exploration assets are subject to an underlying option agreement signed by Latin Metals with Tres Cerros Exploraciones in 2019 under which the former is entitled to acquire an ultimate 100% stake in them.
Barrick Gold will have an initial option to acquire a 70% stake in the exploration projects by the seventh anniversary of the earn-in deal. For this, the gold mining major has to pay $2.3m pursuant to the 2019 underlying option agreement, followed by $750,000 payment to Latin Metals.
Additionally, Barrick Gold has to meet the exploration expenditure and prepare and deliver a preliminary economic assessment for the properties.
During the period of the option, the company will hold the exclusive right to explore and conduct operations on the properties, while Latin Metals will be responsible for the maintenance of the properties.
The two companies will form a joint venture for the continued exploration, development of the properties, following the exercise of the option.
Latin Metals president and CEO Keith Henderson said: “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.”
The mining major can acquire the additional stake of 15% under a second option by the ninth anniversary of the earn-in deal. For this, Barrick Gold has to pay $425,000 to Latin Metals apart from fully funding and delivering a prefeasibility study for the three exploration assets.
Apart from Cerro Bayo, Cerro Bayo Sur, and La Flora, Latin Metals holds an option to earn a 100% stake in the Aylen, Pedro, and Fiorentina projects from Tres Cerros Exploraciones as well.