The Huachi Property is adjacent to Latin Metals’ existing Esperanza Project. Credit: Jason Benz Bennee via Shutterstock.com.

Latin Metals has signed a binding letter agreement with Golden Arrow Resources to acquire up to a 100% stake in the 3,500-hectare Huachi Property in Argentina.

Huachi is located adjacent to Latin Metals’ existing Esperanza Project in San Juan Province in Argentina.

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Under the terms of the letter agreement, Latin Metals can initially acquire a 75% interest in the Huachi project by incurring exploration expenditures of $1m (C$1.35m) and making cash payments totalling $1m to Golden Arrow over a four-year period.

The definitive agreement will be based on this letter agreement and finalised within 90 days following its execution.

Upon exercising the option for the initial 75% interest, Latin Metals has the right to acquire the remaining 25% of the Huachi property.

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In order to acquire the remaining stake, it must notify Golden Arrow within 60 days and pay an additional $2m within 90 days.

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If this top-up right is exercised, Golden Arrow’s stake will be converted to a 1% net smelter return (NSR) royalty.

Should Latin Metals decide against exercising the top-up right, a joint venture (JV) will be established between the two companies.

Latin Metals will hold a 75% interest in the JV, while Golden Arrow will hold the remaining 25% and further explore and develop the Huachi property.

Both parties are required to contribute to work programmes in line with their ownership stakes.

In the event that either party’s interest dilutes to 15% or less, their stake will be converted to a 1% NSR royalty.

Additionally, Latin Metals has the right to conduct due diligence for 30 days following the letter agreement’s execution.

If due diligence results are unsatisfactory, Latin Metals can terminate the agreement without any obligations to Golden Arrow.