Jaguar Mining Inc. said Oct. 4 that Avanco Resources Ltd. is earning up to a 100% stake in the company's Gurupi gold project in Brazil.
Avanco has the right to earn a 20% stake through an aggregate cash fee of US$1.7 million, an additional fee of US$500,000 in cash or shares, and by spending at least US$300,000 on the project.
The publication of a JORC-compliant reserve estimate in excess of 500,000 ounces will earn Avanco an additional 31% interest. Avanco can earn a further 29% interest upon demonstration of adequate funding and starting construction of a process plant with capacity in excess of 50,000 ounces per year.
Should Avanco fail to demonstrate adequate funding for the project, Jaguar will have a one-time right to repurchase a 31% interest in Gurupi by paying Avanco the reasonable costs and expenses incurred in the preparation of the reserve estimate and technical studies.
Avanco can acquire the remaining 20% interest in the project by paying US$6.3 million or the sum of US$12.50 per ounce of gold as per the JORC compliant reserve estimate, whichever is higher.
Jaguar will retain a net smelter return royalty on gold or gold equivalent production at 1% on the first 500,000 ounces, 2% on production from 500,001 to 1.5 million ounces, and 1% on production exceeding 1.5 million ounces.