Austral Gold (ASX:AGD) has signed a letter of intent (LOI) to grant an option for Colossus Resources (TSXC:CLUS) to purchase Austral’s Chilean Calvario and Mirador copper projects.
Under the agreement, Colossus will pay Austral $100,000 upfront for exclusivity. The option consideration costs a US$2.5 million work commitment over a 2-year period, and a 19.9% shareholding in Colossus upon signing the definitive agreement.
Austral will also receive 1 million Colossus options at an exercise price of CAD$0.50, and anti-dilution rights raising up to US$3.8 million.
“We expect to share the potential upside of 2 of our copper projects, Calvario and Mirador, through an equity interest in Colossus”
Austral Gold Chief Executive Officer (CEO), Stabro Kasaneva says: “We are focused on our core gold assets across production and exploration while seeking investment opportunities with third parties to develop our non-core projects. We expect to share the potential upside of 2 of our copper projects, Calvario and Mirador, through an equity interest in Colossus.”
The company also reports that if Colossus prepares a Prefeasibility Study (PFS), an additional contingent payment shall be issued to Austral, comprising 2 million Colossus common shares.
Austral Gold states that the company would become the largest individual shareholder of Colossus, if the grant of option is signed before or on the agreement deadline of 30 May 2023.
Both projects are early-stage copper exploration projects, located about 80km northeast of the coastal city of La Serena in the Coquimbo Region of central-northern Chile in South America.
Austral Gold is a growing gold and silver mining producer building a portfolio of ‘quality’ assets in Chile and Argentina.
Images: Austral Gold Ltd
