Cerrado Gold (CERT.V) has signed a binding agreement to acquire the Falcon properties in Argentina from Pan American Silver (PAAS.TO), Cerrado said Tuesday.
The Falcon properties are located near Cerrado's Calandrias heap leach facilities at its Minera Don Nicolas operation.
Under the terms, Cerrado subsidiary Minera Don Nicolas (MDN) will pay $200,000 grant a 2% net smelter returns royalty on all mineral products from Falcon.
Certain of the Falcon properties are also subject to a 2% net smelter royalty on all mining products to Cerro Vanguardia, for which consent to the acquisition has been obtained.
A 5,000-meter definition and exploration drill program on Falcon will commence immediately, Cerrado said.
"The Falcon properties host additional mineralization in close proximity to our existing operations, and beyond Falcon, we see the opportunity to leverage our installed infrastructure to drive regional consolidation of the area to enhance and extend the potential mine life at our Calandrias heap leach operations and extend the long-term mineral growth potential for MDN," Cerrado Chief Executive Officer and Chairman Mark Brennan said.