The Royalty is calculated over the sale of all locatable minerals produced from the Santa Teresa 1/60, Santa Maria 1/60 and San Cayetano 1/20 exploitation concessions
Los Andes Copper announces sale of royalty on Vizcachitas Project. (Credit: Łukasz Klepaczewski from Pixabay)
Los Andes Copper Ltd. (TSXV: LA) (“Los Andes”, or the “Company”) is pleased to announce that it has sold a net smelter return (“NSR”) royalty to Resource Capital Fund VI L.P (“RCF VI”) for a total price of US$14 million (the “Royalty”). The Royalty is calculated over the sale of all locatable minerals produced from the Santa Teresa 1/60, Santa Maria 1/60 and San Cayetano 1/20 exploitation concessions (the “Concessions”) that form part of the Company’s Vizcachitas Project in Chile (the Vizcachitas Project”). Under the Royalty, RCF VI will receive a 2.00% NSR for open pit operations and a 1.00% NSR for underground operations.
Highlights
- RCF VI to pay US$9 million for the Royalty in instalments and an additional contingent payment of up to US$5 million by RCF (the “Contingent Royalty Payment”) if RCF VI were to sell the Royalty prior to commencement of commercial production. Upon commencement of commercial production, any unpaid balance of the US$5 million Contingent Royalty Payment will be deducted from the initial royalties payable.
- The financing will primarily be used to fund the purchase of an existing royalty (the “Existing Royalty”) previously granted on the Vizcachitas Project by the Company’s indirect, wholly owned subsidiary, as described further below.
Fernando Porcile, Executive Chairman of Los Andes, commented:
“I am delighted to announce the completion of this NSR royalty agreement which highlights the continued support from RCF VI for the Vizcachitas Project. It places the Company in a strong position to continue successfully developing the Vizcachitas Project.
“With a number of work streams currently underway, or due to commence shortly, I look forward to keeping the market updated with further progress.”
Existing Royalty Purchase
The Company, through its indirect wholly-owned subsidiary, Gemma Properties Group Ltd. (“Gemma”), has entered into a 30-month option to purchase an existing royalty applied to the sale of all locatable minerals produced from the Santa Teresa 1/60, Santa Maria 1/60, San Cayetano 1/20, Tigre 1/30 and Huemul 1/40 exploitation concessions that form part of the Company’s Vizcachitas Project whereby a 2.00% NSR for open pit operations and 1.00% NSR for underground operations is payable (the “Existing Royalty Purchase Agreement”). The total purchase price under the Existing Purchase Price Agreement varies between US$6.8 million and $7.6 million, depending on the date of exercise of the option. Gemma has made an initial option payment of US$1 million upon execution of the Existing Royalty Purchase Agreement, with the following subsequent option amounts payable as follows:
- an additional US$5.8 million on the date which falls 12 months of the date of the Existing Royalty Purchase Agreement (in which case the total option price would be US$6.8 million); or
- at the option of Gemma, an additional US$2.5 million on the date which falls 12 months from the date of the Existing Royalty Purchase Agreement along with an additional (a) US$3.6 million on the date which falls 24 months from the date of the Existing Royalty Purchase Agreement (in which case the total option price would be US$7.1 million); or (b) US$2.3 million on the date which falls 24 months from the date of the Existing Royalty Purchase Agreement along with an additional US$1.8 million on the date which falls 30 months from the date of the Existing Royalty Purchase Agreement (in which case the total option price would be US$7.6 million).
Source: Company Press Release