Overview and Highlights
The Baños del Indio epithermal property is comprised of 5,000 hectares of well-developed high-level steam heated epithermal style alteration and is considered by Auryn to be one of the largest untested epithermal alteration centers in Peru.
Baños del Indio shares many similarities with the La Coipa mine complex in northern Chile where economic mineralization is principally located beneath similar high-level steam heated epithermal alteration. Initial exploration to define drill targets will focus on structural mapping, multi-spectral analysis to identify high temperature clays, volumetric sampling and induced polarization geophysical surveys.
The Company acquired the rights to the Baños del Indio property through an option agreement with a local Peruvian company, Exploandes S.A.C (the “Banos Option”). Under the Baños Option, the Company may acquire a 100% interest, subject to a net smelter return royalty (NSR), through a combination of work expenditures and cash payments (all dollar amounts are in USD) as detailed in the table below:
|Due dates||Property Payments||Work Expenditures|
|On signing||$ 100,000||-|
|Within 12 months of the commence of work (additional)||$ 100,000||$ 200,000|
|Within 24 months of the commence of work (additional)||$ 100,000||$ 250,000|
|Within 36 months of the commence of work (additional)||$ 200,000||$ 1,000,000|
|Within 48 months of the commence of work (additional)||$ 150,000||$ 2,000,000|
|Within 60 months of the commence of work (additional)||$ 2,500,000||-|
|Total||$ 3,150,000||$ 3,450,000|
The Banos del Indio NSR is 3.0% with 50% (being 1.5%) buyable for $6,000,000. In the event the Company does not complete a feasibility study within 3 years of exercising the option, an escalating advanced royalty starting at $200,000 per annum shall become payable. The total amount of the advanced royalty is capped at $1.5 million.
The Company is also obligated to pay a production bonus of $2,500,000 upon initial commercial production.
Cautionary Wording with Respect to the Mineral Interests
Auryn holds its interests in Peru through Corisur Peru SAC, which controls (among other) certain licenses (including the Huilacollo and Baños del Indio projects) that are located within a special legal zone which runs 50km back from the Peruvian border. As a non-Peruvian company, Auryn’s right to ultimately acquire title over the shares issued by Corisur Peru SAC and to own and/or exploit these licenses requires approval from the Peruvian government. While Auryn is in the process of submitting its applications with respect such the approval and does not currently foresee any legal reason why it would be denied the approval, some risk of denial or delay should be assumed to exist.