Latin Metals has entered into a letter of intent with Minsur covering a potential acquisition of its wholly owned Lacsha Copper Project in Peru, with the structure offering Latin Metals up to $42.62 million in aggregate cash payments if all option and royalty buyback provisions are exercised. The companies plan to work toward definitive agreements within 90 days.
Under the proposed structure, Minsur can earn a 75% interest in Lacsha over six years by completing at least 60,000 meters of drilling and making $2.62 million in aggregate cash payments to Latin Metals. Minsur would fund the drilling program.
Minsur would not earn an interest in the project until the option requirements have been satisfied.
Cash payments would begin with $220,000 upon execution of definitive agreements and another $250,000 at the commencement date, with additional payments scheduled through the sixth anniversary.
After earning 75%, Minsur would have a 180-day window to acquire the remaining 25% interest for another $20 million in cash, bringing the cash paid to Latin Metals to as much as $22.62 million. Latin Metals’ ownership would then convert into a 2% net smelter returns royalty.
For three years after that buyout, Minsur could purchase half of the 2% royalty for another $20 million.
If that provision is exercised, Latin Metals would have received aggregate cash payments of up to $42.62 million while retaining a 1% NSR royalty that would not be subject to additional buyback rights.
If Minsur elects not to purchase the remaining 25% interest, the parties would instead form an incorporated joint venture owned 75% by Minsur and 25% by Latin Metals’ Zafiro Mining subsidiary.
Latin Metals could elect to convert its joint venture interest into a 2% NSR royalty. If its JV ownership were subsequently diluted below 10%, the interest would automatically convert into a 1% NSR royalty.
Latin Metals originally acquired Lacsha through staking and spent less than C$1 million advancing early-stage exploration and completing drill permitting before reaching the agreement with Minsur.
The project is located approximately 130 kilometers north of Lima and has road access, nearby power, proximity to port infrastructure, a multi-year community agreement and drilling permits.
Exploration has identified widespread alteration, copper-molybdenum geochemistry and coincident geophysical anomalies that Latin Metals associates with porphyry copper systems.
KEY QUOTES:
“Through this transaction, Latin Metals may ultimately transform an internally generated exploration project into US$42.6 million in cash while retaining a 1% NSR royalty on future production. The transaction demonstrates the capital efficiency of Latin Metals’ prospect generator model. Following modest early-stage exploration expenditures, the Company has attracted a significant mining partner to fund the capital-intensive stages of exploration and development while preserving meaningful long-term exposure to project success.”
“Minsur’s decision to partner on Lacsha highlights both the quality of the project and the technical work completed by our team. Lacsha has evolved into one of the most compelling copper opportunities within our portfolio, combining strong copper-molybdenum geochemistry, compelling geophysical targets, established community agreements and drill permits.”
“Minsur is a multi-billion-dollar mining company, one of Peru’s most respected miners, and an excellent partner for Lacsha. Minsur has operated in Peru for decades, giving them deep technical, permitting and community experience that makes them a highly credible partner for advancing a Peruvian copper project.”
Keith Henderson, CEO Of Latin Metals
