Patagonia Gold retains 20% of La Manchuria after Astra spends US$3.0 million to earn 80%. Astra can buy another 10% for US$5.0 million within two years. NewCo will hold the assets.
Patagonia Gold Corp. said Monday that Astra Exploration Inc. has exercised its first earn-in option at the La Manchuria gold and silver property in southern Argentina, spending more than US$3.0 million on exploration and development to take an 80% interest. Patagonia keeps the remaining 20%.
The two companies are setting up a joint venture that will hold the property and additional claims within a defined area of interest. Once the transfers go through, a newly formed Argentine company called NewCo will own the assets, with Astra holding 80% and Patagonia 20%.
La Manchuria covers more than 5,600 hectares in the Deseado Massif region of Santa Cruz Province, an area known for precious metals deposits. Patagonia's retained stake gives it exposure to future work at the project without putting up more cash for now. Under the earn-in terms, Patagonia's interest will be carried until a technical report compliant with NI 43-101 identifies at least one million gold equivalent ounces in the inferred or indicated resource category. After that milestone, both parties will fund spending in proportion to their ownership.
Astra can pick up an additional 10%, moving to 90% and cutting Patagonia to 10%, by paying US$5.0 million in cash within two years of completing the first earn-in. If either side's stake falls below 10%, that interest converts to a 1% net smelter return royalty.
"Astra's exercise of the First Earn-In at La Manchuria represents another important step in Patagonia's strategy of maximizing the value of its project portfolio through strategic partnerships, while retaining meaningful exposure to the future upside of these assets," Chief Executive Officer Christopher van Tienhoven said in the statement.
The approach mirrors Patagonia's deal at the Tornado and Huracán project in the same province, which is under an option agreement with Newmont Corp. Patagonia's broader portfolio includes the Calcatreu project in Río Negro and the Cap-Oeste underground project. The company holds mineral rights to more than 375 properties across several Argentine provinces.
Patagonia Gold Corp. shares trade on the TSX Venture Exchange under the ticker PGDC.
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