Plata Latina MineralsCorp. said July 14 that it signed a letter of intent with a wholly ownedsubsidiary of Fresnillo Plc,giving Fresnillo the option to acquire Plata Latina's Naranjillo silver property in Mexico.
Upon the execution of a definitive agreement for the transaction,Fresnillo will have to pay Plata Latina a total of about US$2.2 million throughscheduled installments over three years.
Fresnillo will also be required to spend at least US$3 millionin exploration at the property.
The definitive agreement covers a three-year option term andstipulates that Plata Latina will retain a 3% net smelter royalty over Naranjillo.Fresnillo may purchase a third of the royalty for US$1 million and the remainingroyalty for US$5 million.
Should Fresnillo proceed with the acquisition after the optionperiod, Plata Latina will be entitled to receive advance royalty payments of US$100,000,capped at US$1 million, which will be deducted from future royalty payments.
The deal remains subject to approvals, due diligence and thecompletion of a definitive agreement.
With the potential sale of Naranjillo, Plata Latina plans toconduct geophysical and geologic field work to define high potential drill targetson its other three properties in the Mexican silver belt and to restart field workto generate new grass roots exploration projects for its portfolio.