Latin Metals has signed a letter of intent (LOI) with AngloGold Ashanti as a potential partner for its three gold exploration projects in Salta Province, north-western Argentina.

The non-binding LOI provides a 90-day period to the firms to negotiate on and enter an agreement, if deemed advisable, pertaining to the Latin Metals’ three gold projects, notably Organullo, Ana Maria, and Trigal Gold.

The definitive agreement will grant option to AngloGold to earn an initial 75% stake in the projects, by paying $2.55m in cash to Latin Metals.

AngloGold will also invest $10m on exploration work within five years following the definitive deal execution and delivery.

Moreover, the deal will provide an option to AngloGold to increase its stake in the projects to 80%.

In exchange, the firm is required to prepare an independent mineral resource estimate in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects on at least one project.

It will also pay $4.65 per gold equivalent ounce contained within the mineral resource to Latin Metals.

Latin Metals president and CEO Keith Henderson said: “Relatively advanced-stage exploration projects like Organullo require significant expenditures to assess the full potential of the project, which expenditures would otherwise need to be financed through dilutive equity financing.

“Under the terms contemplated by the LOI, Latin Metals would retain a significant minority position and have the opportunity to participate with AngloGold in a future joint venture.”

In July, AngloGold Ashanti offered to acquire the remaining stake in Canadian firm Corvus Gold for $370m.