Lion Copper and Gold Corp (TSX-V:LEO, OTCQB:LCGMF) has announced an agreement to spin out its option on the Butte Valley porphyry copper-gold property in Nevada to 1301666 BC Ltd, which is in late-stage negotiations with a TSX Venture listed Capital Pool Company for a possible business combination.
Lion Copper and Gold said the option deal will give it an approximate 22% equity stake in the resulting listed issuer, assuming completion of financings for proceeds of about C$6 million.
“The Butte Valley property options were acquired by us in 2019 as a strategic acquisition with a view to finding a partner to advance exploration. The agreement with 1301666 BC Ltd achieves this objective,” Lion Copper and Gold chairman Tom Patton said in a statement.
READ: Lion Copper and Gold announces definitive agreement to acquire Chaco Bear and Ashton properties in British Columbia
“We retain a significant interest in the advancement of the Butte Valley property, while continuing to focus on our core Yerington district copper assets, including the Macarthur copper project,” Patton added.
The company noted that it will be entitled to a 1.5% net smelter return (NSR) royalty on each of the Butte Valley option agreements, which are subject to a buy-down to a 1.0% NSR in exchange for a payment of US$7.5 million per property.
It pointed out that 1301666 BC Ltd is owned by two individuals that are also directors and officers of Lion Copper and Gold and, as such, the transaction is a non-arm's length transaction under TSX Venture Exchange rules.
The Butte Valley property has had 17 holes drilled and geophysical studies including heli-MAG and IP have been completed, although a mineral resource has not been established, according to the company.
Lion Copper and Gold is advancing the MacArthur copper project in Nevada, and exploring the Chaco Bear and Ashton properties in British Columbia.
The company's MacArthur asset sits in Mason Valley, a large, historic copper camp within a land package spanning 51 square miles. The project is a large-scale, low-cost, heap leach operation with potential for near-term production of pure copper cathode.
Contact Sean at sean@proactiveinvestors.com