Latin Metals Inc. has entered into a letter of intent with Minsur S.A. granting the major miner an option to acquire up to a 100% interest in the Lacsha copper project in Peru's Lima Department.

Under the conditional arrangement, Minsur can earn an initial 75% interest over six years by making US$2.62 million in cash payments and funding up to 60,000 metres of drilling. Commitments include an initial payment of US$220,000 on the effective date of definitive agreements and US$250,000 upon reaching the drill commencement date.

The companies are working toward completing definitive agreements within 90 days. Before drilling can start at the property, the partners must file specific notices with governmental authorities following administrative approvals. Lacsha already holds a valid FTA drilling permit and a multi-year community agreement.

“Through this transaction, Latin Metals may ultimately transform an internally generated exploration project into US$42.6 million in cash while retaining a 1% NSR royalty on future production. The transaction demonstrates the capital efficiency of Latin Metals' prospect generator model.”

— Keith Henderson, CEO

If Minsur completes the initial 75% earn-in, it holds a 180-day option to acquire the remaining 25% interest for US$20 million in cash. Exercising this buyout would convert Latin Metals' holding into a 2% net smelter returns royalty. Minsur would then retain a three-year window to buy back half of that royalty for an additional US$20 million, leaving Latin Metals with a 1% royalty free from further buy-back rights. Should Minsur decline the buyout, the parties would form an incorporated joint venture.

Latin Metals originally acquired Lacsha through staking and advanced the asset through early exploration and drill permitting at a cost of less than C$1 million. Operating under a prospect generator model, the company maintains a portfolio of 16 projects across Peru and Argentina.

“Minsur’s decision to partner on Lacsha highlights both the quality of the project and the technical work completed by our team. We believe the Project is well positioned for systematic drill testing and are pleased to advance it with a partner of Minsur's calibre.”

— Keith Henderson, CEO

Read the full announcement: Latin Metals and Minsur S.A. Agree Option Terms for Lacsha Copper Project, Lima Department, Peru