Radius Gold Inc. granted Pan American Silver Corp. an option to earn up to a 75% interest in its Amalia gold-silver project, covering 9,450 hectares in Chihuahua, Mexico.

The company said July 30 that Pan American can earn an initial 65% interest in the early stage project by making cash payments totaling US$1.5 million and spending US$2 million on exploration over four years.

Radius Gold will serve as project operator during the initial phase of the agreement.

Pan American can earn an additional 10% stake by advancing the property to the pre-feasibility stage.

Radius recently secured permission from local authorities to drill on the Amalia property, with Pan American-funded drilling expected to start within the coming months.