Orosur Mining Inc (LON:OMI) has decided to terminate its option agreement on the Anillo gold exploration project with the Chilean national mining company, Nacional del Cobere de Chile (Codelco).
The Anillo project was originally optioned by the AIM-listed gold miner from Codelco in 2010, giving Orosur the right to acquire a 65% interest in the project by spending US$4mln over 4 years and completing a bankable feasibility study.
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In June 2015, the company closed a further option agreement with Asset Chile Exploración Minera Fondo de Inversión Privado (AC), whereby AC subscribed for an initial amount of Anillo SPA common shares equal to 16% of the capital of Anillo SPA for gross proceeds of US$850,000. AC had a further option to elect to earn up to 32.5% and up to 40%, by funding an additional US$1.25mln and an additional US$1.375mln respectively, which did not materialise.
Rather, following completion of the first phase of capital, Orosur and AC agreed to extend AC’s timing to enter phase 2 until December 2017 in exchange for AC paying care and maintenance costs of Anillo as well as the Chilean office costs and also allowing Orosur to enter into discussions with other parties to potentially fund the project.
In view of the lack of positive exploration results during phase 1, AC gave notice of their intention not to enter into phase 2.
Following this, and due to what it said was a lack of alternative partners and the early stage and high-risk nature of the project, Orosur had decided not to proceed with the option agreement.
The group added that no penalties were involved with the termination of the Anillo option agreement, with the approximately US$5.5mln asset value of Anillo to be written down in the next set of financial results.