Soma Gold Corp. (TSX-V:SOMA), the Colombia-focused miner, told investors it has struck an option deal worth potentially over US$8 million to sell the Tucuma properties in Para state to established Brazilian mining group Ero Copper Corp.
The miner said that along with Angra Metals Mineracao Ltda it has entered the deal to grant Ero an option to buy 100% of the assets.
Separately, Soma said it has struck a deal with the former owners of certain mining rights to acquire their 1% net smelter returns royalty (NSR) and to extinguish the former owners' right to a US$3 million payment, which is due on the start of commercial production on those rights.
Upon Soma having exercised this buy-back option, together with Ero having exercised its option to acquire the properties, Soma will be entitled to receive a 1.5% NSR.
READ: Soma Gold set for 20,000 metres of drilling at Colombia properties this year as it unveils second phase of five year plan
"Soma is very pleased to have reached an agreement with a company of Ero's stature, and whose knowledge of the region and experience in Brazil will assist in demonstrating the potential of the Tucuma property," noted Geoff Hampson, Soma's executive chairman in a statement.
Ero can acquire the Tucuma property by paying to Soma up to US$6.45 million and spending US$1.7 million on exploration in three phases.
This includes cash of US$250,000 on signing of the agreement and US$1.2 million for exploration on or before September 6, 2023.
Ero must pay a final option payment of US$6 million in cash or shares in the event that Soma has exercised the buy-back option or US$3 million in cash or shares if Soma has failed to exercise the buy-back option, on or before September 6, 2025.
Soma owns two adjacent mining properties - La Ye and Mangos - in Antioquia, Colombia with a combined milling capacity of 675 tonnes per day (tpd), and is permitted for 1,400 tpd.
The El Bagre mill is currently operating and producing and internally generated funds are being used to finance a regional exploration program.
Contact the author at giles@proactiveinvestors.com