Elemental Royalty subsidiary Bronco Creek Exploration has entered into an option agreement with First Quantum Minerals for the sale of the Hachita porphyry copper-gold project in south-western New Mexico, US.

The Hachita project is located around 95km south-east of Lordsburg, within the Sylvanite mining district.

The project targets Laramide porphyry copper-gold and skarn mineralisation in an underexplored area on the eastern side of the Laramide porphyry belt, expanding exploration coverage across a region with recognised potential.

Under the option terms, Elemental will receive an execution payment, staged option payments and defined work commitments during the earn-in period.

The execution and option payments to Elemental exceed $800,000 (C$1.12m) over a five-year earn-in period.

Elemental acquired the project by staking open ground after identifying untested targets in the underexplored Sylvanite district during regional generative exploration work in the Laramide belt in south-western US.

Under the agreement, Canadian company First Quantum can earn a 100% interest by making a $50,000 execution payment, option payments totalling $750,000 and cumulative exploration expenditures of $6m over the five-year option term.

Upon option exercise, Elemental will retain a 3% net smelter royalty; 1% of the royalty may be bought back for a total of $5m on or before the fifth anniversary of a published resource.

First Quantum will make annual advanced royalty payments to Elemental of $100,000 upon each anniversary of the closing date until the completion of either a feasibility study or a development decision.

Additionally, First Quantum will make project milestone payments of $500,000 upon completion of a feasibility study, and $2.5m upon a development decision.

Elemental CEO David M. Cole said: “This transaction on the Hachita Project represents another excellent example of Elemental’s impressive technical expertise in identifying prospective targets in underexplored jurisdictions and thereby attracting world-class exploration partners.

“We look forward to working with First Quantum to advance Hachita and seeing the project progress further through a formal exploration campaign. Project generation remains a core tenet of our business model as we continue to build our portfolio of royalty interests.”