Mundoro options Serbian exploration assets to BHP, shares rise
Mundoro Capital Inc. [MUN-TSXV, MUNMF-OTCQB] has entered into a definitive option agreement with a unit of BHP Group Ltd. [BHP-NYSE, BHPLF-OTCPK], in which Mundoro has granted BHP an option to earn-in to seven of Mundoro’s exploration licenses (BHP-Mundoro Central Timok Project) located within the Timok Magmatic Complex in Serbia.
On Tuesday, Mundoro shares jumped 20.8% or $0.05 to 29 cents. The shares trade in a 52-week range of 29.5 cents and 15 cents.
Timok is one of the most prolific metallogenic domains in the Tethyan Belt, hosing several significant deposits and major producing mines It hosts the Cukaru-Peki deposit as well as the Bor (copper porphyry) underground mine and Veliki Krivelj (copper-gold-porphyry) open pit.
The BHP-Mundoro Central Timok Project consists of 418 square kilometres of ground and is located within the Timok Magmatic Complex in Serbia. A total of $15.4 million has been spent on the project by Mundoro and previous partners. Six years ago, Mundoro granted Vale Canada Ltd. an option to earn-in to four exploration licenses in the Timok Magamatic Complex.
Under that agreement, Mundoro granted Vale an option to earn, over two primary phases, up to a 75% interest in the Vale-Mundoro Projects by sole funding expenditures of up to $60 million.
Extensive work has been completed across the license in the project area, including comprehensive geophysical surveys, systematic geochemical surveys (stream sampling, soil sampling, rock sampling, and trenching), and targeted diamond drilling campaigns.
Under the latest agreement, Mundoro has granted BHP an option to earn, over 10-years a 100% interest in the BHP-Mundoro Central Timok Project. To exercise the option, BHP must fund cumulative expenditures of up to US$35 million ($48.9 million) by set milestones. BHP must also make annual option payments starting at US$323,000 ($451,070), increasing by 2.0% per year. The major must also make milestone payments of US$2.0 million ($2.8 million) each when certain resource estimates are declared, up to a total of US$10 million ($13.9 million), or the same amount upon exercise of the option if no resource is declared.
Under the latest agreement, Mundoro is the initial operator, responsible for overall operations related to the project and will receive operating fees. If BHP has funded at least US$20 million in exploration expenditures, or if at least 40,000 metres of cumulative drilling has been completed, BHP may elect to replace Mundoro has the operator.
Upon exercise of the option, BHP will begin making annual advanced royalty payments to Mundoro. The value of these advanced royalty payments will be equal to the dollar amount of the last option payment made under the agreement prior to the exercise of the option, and such advanced royalty payments will increase by 2.0% annually. option Mundoro will retain a 2.0% net smelter return royalty. However,
When the option is exercised, BHP will retain the right to purchase 50% of the royalty prior to the commencement of production. The buy back price will be based on a certain tonnage of copper multiplied by the one year average copper price on the London Metal Exchange.