Austral Gold (ASX:AGD) has signed a definitive agreement to grant Colossus Resources (TSXV:CLUS) an option to purchase Austral’s Chilean Calvario and Mirador copper projects in South America.
The agreement follows from a release on 5 April 2023, which provided exclusivity to Colossus through a letter of intent (LOI) and the payment of US$100,000.
Austral, which has a market capitalisation of $15.92 million, says the granting includes certain conditions, including regulatory authorities approving the transaction, and Colossus completing an equity financing to raise at least US$1.5 million within 90 days after the agreement date.
Key considerations of the transaction include US$2.5 million work commitment over 2 years, issuing 19.99% of Colossus shares on a non-diluted basis, one million Colossus warrants at C$0.50 and anti-dilution rights up to Colossus raising US$3.8 million.
There is an additional payment of 2 million Colossus common shares if the company prepares a Prefeasibility Study.
Austral says this would make the company become the ‘largest’ shareholder of Colossus.
Chief Executive Officer (CEO) Stabro Kasaneva says: “The agreement offers potential upside for the company, enabling Austral to focus on its core gold assets across production and exploration, while still sharing in the potential success of the Calvario-Mirador copper projects in Chile as the largest shareholder of Colossus.”
Both projects are early-stage copper exploration projects that lie 80km northeast of the coastal city of La Serena in the Coquimbo region of central-northern Chile in South America.
Colossus Resources is an early stage mineral explorer focused on exploring and acquiring mineral property assets.
Austral Gold is a growing gold and silver mining producer focused on building a portfolio of quality assets across Chile, Argentina, and the US.
As of 30 September 2023, Austral had $2 million cash and cash equivalents at hand, according to its latest quarterly report.
Write to Aaliyah Rogan at Mining.com.au
Images: Austral Gold