Eurasian Minerals (EMX.V, EMX) has executed an option agreement with Anglo American (AAL.L) to explore the Copper Springs porphyry project in Arizona. This project has previously been drilled, and the deepest drill hole targeting the copper porphyry was ended at 670 meters and contained native copper.
Anglo will be allowed to earn a 100% interest in the property by paying US$447,000 in cash to reimburse Eurasian for its 2016 holding and permitting costs, and spending US$5M on exploration within the first five years. Once Anglo has completed its earn-in and has secured a 100% ownership in the project, it will pay a final US$110,000 in cash to Eurasian and issue a 2% NSR. There’s no buyback clause except for two specific parcels of land, where Anglo can repurchase 0.5% of the NSR for US$2M in cash.
On top of that, Anglo will also be required to make advance minimum payments. A first $100,000 will be due on an annual basis, increasing to $200,000 per year after a Scoping Study or PEA has been completed but Anglo could also elect to wire a one-time US$3.5M payment instead of making the annual payments, once a scoping study has been completed.
Eurasian seems to have negotiated this deal pretty well because on top of the minimum exploration expenditures, NSR and annual advance payments, Anglo will also have to pay US$3.5M in milestone payments of which the final $2M – related to the completion of a feasibility study – will be credited against future royalty payments of the NSR.
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The author has no position in Eurasian Minerals. Please read the disclaimer
