EMX Royalty Corp. said Feb. 8 that it agreed to option its Buckhorn Creek copper project in Arizona to Rio Tinto-backed Kennecott Exploration Co.
Kennecott can acquire the property by paying US$550,000 and completing US$4.5 million in exploration expenditures before the fifth year of the agreement. EMX will retain a 2% net smelter return royalty upon exercise of the option, which is not capped or purchasable.
After exercising the option, Kennecott will be required to make annual advance minimum royalty payments starting at US$100,000 and increasing to US$150,000 upon completing an order-of-magnitude study or a preliminary economic assessment. It may opt for a one-time payment of US$3.5 million in lieu of these obligations. All royalty payments will cease when the project begins commercial production.
Kennecott will also need to pay EMX US$500,000, US$1 million and US$2 million, respectively, upon the completion of an order-of-magnitude study or PEA, a pre-feasibility study and a feasibility study. The feasibility study payment will be credited against future royalty payments.
The Buckhorn Creek project comprises 169 unpatented lode claims and one state exploration permit. Earlier work on the property consisted of mapping, surveying and drill permitting.
EMX and Kennecott are discussing a proposed work program for Buckhorn Creek that may include further geophysical work and an initial drill test.
