Kootenay Silver, through its Mexican subsidiary, has signed a deal to offer an option to Capstone Mining for the acquisition of the La Mina project in Sonora State, Mexico.
The project, staked by Kootenay as part of its generative property portfolio strategy, is located 180km south-east of Hermosillo city and covers the upper levels of a zoned copper porphyry mineralised system exposed over an area measuring 4km².
Under the deal, Capstone is required to make staged cash payments totalling $600,000 and spend $4m over the first four years towards exploration costs, in exchange for an initial 60% interest in La Mina.
Thereafter, the company can increase its stake to 100% by completing a preliminary economic assessment, a pre-feasibility study and making further payments totalling $8.4m to Kootenay in stages at each of the milestones.
Kootenay Silver President and CEO James McDonald said: “We are pleased to have completed the agreement with Capstone Mining and are looking forward to have them drill test this exciting copper porphyry system.”
A third party holds a net smelter return royalty (NSR) of 2.5% over the project, and Kootenay has renegotiated the terms of the deal to be able to repurchase up to 2% before the commencement of commercial production.
If Capstone acquires 100% interest in the project, Kootenay will be able to retain a 1% NSR with no buy-out option, 0.5% of which will be held by the third party.
La Mina hosts a large leached argillised pyritic zone, where surface grab and chip samples collected averaged about 300ppm copper.