Atalaya Mining is to buy a 10% stake in Cobre San Rafael, a subsidiary of Explotaciones Gallegas, in order to increase its interest in the Touro copper project in Spain.
The proposed acquisition is part of an earn-in agreement which enables the AIM-listed company to buy up to 80% of Cobre.
Atalaya sees the acquisition of an initial 10% of Cobre as a low risk first step in creating a growth portfolio to complement its other project in Spain, Proyecto Riotinto, which is now fully operational.
The deal includes four phases, the first was that the company paid €500,000 to secure the exclusivity agreement and will continue to fund up to a maximum of €5m to get the project through the permit and financing stages.
For the second phase, Atalya will pay €2m once permits have been granted to earn in a further 30% stake in the project.
Phase three will be the company paying €5m to earn in additional 30% stake once capital is in place and construction is underway.
The final phase will take the company to an 80% interest in Touro by buying and additional 10% stake in return for a 0.75% net smelter return royalty with a buyback option.
Atalya chief executive Alberto Lavandeira said: “The initiation of Atalaya’s first major project following the successful restart of Proyecto Riotinto is an exciting prospect and the next step in our growth strategy.
“Following the preliminary work and exercise of the option, we are now entering the permitting phase, which we believe will be a relatively straightforward process owing to the current producing status of Touro – as an aggregate quarry – and the experience of our local partners.”
Shares in Atalaya Mining were down 1.51% to 147.25 GMT.
Source: Digital look