Ownership
The Sombrero property covers approx. 102,000 hectares1 which has been acquired through a combination of staking and option agreements.
| Ownership | Claims | Hectares |
|---|---|---|
| Direct* | 114 | 100,800 |
| Aceros Option | 3 | 600 |
| Mollecruz Option | 4 | 1,300 |
Mollecruz Option
On June 22, 2018, the Company acquired the rights to the Mollecruz concessions which are located just to the north of the Ccascabamba target area, and are host to the Good Lucky target.
Under the terms of the Mollecruz Option, the Company may acquire a 100% interest in the concessions by completing US$3.0 million in work expenditures and by making payments totaling US$1.6 million to the underlying owner over a five-year period. At signing, the Company paid US$50,000 and upon exercise of the option, the underlying owner will retain 0.5% NSR royalty with an advance annual royalty payment of US$50,000.
Effective May 20, 2019, the Company formally declared the existence of a force majeure event under the Mollecruz Option thereby deferring the Company’s obligation to make the June 2019 and 2020 property payments and any subsequent property payments and work expenditures for a maximum of 24 months from the declaration date.
On March 1, 2021, the Company agreed with the owner to extend the force majeure declaration for another 24 months and paid the US$50,000 June 2019 property management as consideration. Most recently, on May 15, 2023, the Company amended its Mollecruz Option again and this time extended the recognition of the force majeure status until such time an agreement or agreements are in place that allow the Company to access the concessions in order to carry out exploration work.
A payment of US$5,000 was paid at the time of the 2023 amendment and will be paid annually under the option agreement until access to the concessions is achieved by the Company.
Payments
Aceros Option
On December 13, 2018, the Company entered into a series of agreements with Corporacion Aceros Arequipa S.A. (“Aceros”) to acquire the rights to three key inlier mineral concessions, which include the Fierrazo and Nioc targets.
If the Aceros Option is fully exercised, a joint venture would be formed in which the Company would hold an 80% interest (Aceros – 20%). The joint venture would combine the 520-hectare Aceros concessions plus 4,600 hectares of the Company’s Sombrero land position.
The Company was required to make a series of option payments totalling US$800,000, which has been paid, and complete US$5.15 million in work expenditures over a five-year period, of which approximately US$1.0 million has been spent to date.
In 2021, the Company amended the Aceros Option to defer the work expenditure requirements dependent on access to the concessions, in exchange for an additional annual payment of US$100,000 for the period that the option is in place.
The option payments are subject to 18% Value Added Tax (IGV) in Peru which is not recoverable.
Payments
- The total claim area is reported as 102,699 Ha; however, it is noted that there are overlaps within the claims. Following the removal of these overlaps, the effective area is ~97,000 Ha. ↩︎