Hochschild Mining Plc secured an option to earn a 100% stake in Revelo Resources Corp.'s Loro gold-silver project in northern Chile, according to a June 6 news release.
According to the terms of a letter of intent, Hochschild can earn the stake over five years in exchange for a series of in-ground investments and/or drilling commitments totaling US$13 million and/or 30,000 meters, and a series of cash payments to Revelo totaling US$5.3 million.
After exercising the option, Hochschild will pay a further US$15 million in cash and a 1% net smelter royalty on any future production.
Revelo will act as operator of the first two phases of the Loro exploration program, subject to Hochschild signing off on programs and budgets.
Revelo also reported that it is recovering certain properties being abandoned by Hochschild at the latter's Victoria copper-gold project. The company has a 2% NSR on the Victoria project, while Hochschild has a 2% NSR on certain areas of Revelo's Cerro Buenos Aires, Las Pampas and Cerro Blanco properties.
The parties agreed that in exchange for Revelo awarding a 1% NSR to Hochschild over the Victoria properties being recovered, Hochschild will reduce the NSR on the Cerro Buenos Aires, Las Pampas and Cerro Blanco properties to 1% from the current 2%.
Hochschild will also be liable to pay an underlying NSR production royalty to BLC SpA in Chile, comprising 2% on precious metals and 1% on base metals. Revelo will transfer to Hochschild a right to buy back half of this royalty for C$5.0 million at any time up to five years from the start of mineral production.