Mirasol Resources Ltd. on Jan. 30 said it recently signed a letter of intent with OceanaGold Corp. to jointly explore Mirasol's early stage La Curva gold project in Argentina. Under the agreement, OceanaGold can earn up to a 75% interest in the property.
Mirasol's efforts on the 36,100-hectare property to-date include exploration and geophysical work, which identified three priority drill ready prospects: the Cerro Chato, Loma Arthur and South West targets.
OceanaGold can acquire an initial 51% interest the project by spending US$7 million on exploration over four years and paying US$1.5 million in staged cash payments.
The initial consideration includes a minimum US$1.3 million spend on exploration within the first year, including 3,000 meters of drilling, and a US$100,000 payment on signing. Upon meeting the minimum obligations, OceanaGold can cease further spending at any time by giving notice.
OceanaGold can then increase its interest to 70% by meeting various milestones, which include completing a preliminary economic assessment and a feasibility study as well as making a decision to mine within the next six years.
Upon OceanaGold securing a 70% interest and making a decision to mine at La Curva, Mirasol can retain a 30% interest by providing its pro rata proportion of development costs or can elect to retain 25% of the project by requiring OceanaGold to provide financing for Mirasol's proportion of mine development.
If OceanaGold is required to provide funding, Mirasol's loan repayments will be made from 50% of Mirasol's net cash flow from the mine. As consideration for OceanaGold providing the development financing, the company's interest will increase to 75%.
The agreement also includes provisions for Mirasol to advance and/or regain control of the La Curva project if OceanaGold fails to or elects not to advance the project through each of the stages following the initial 51% earn in.
The deal is subject to due diligence by OceanaGold, with an exclusivity period to negotiate and enter a binding agreement ending March 31.
Mirasol will act as project operator for the first year of the exploration program. Drill permitting is underway in a bid to start initial drill testing upon completion of a binding agreement.