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Patagonia Gold Announces Exploration Partnership

Patagonia Gold Corp. and Astra Exploration Inc. (collectively, the “Parties”) have engaged in a legally enforceable letter agreement dated July 8, 2024 (the “Option Agreement”).

Patagonia Gold Announces Exploration Partnership

Image Credit: Mr. Tempter/

This agreement provides Astra with the option (the "Option") to acquire up to a 90 % undivided interest in Patagonia's La Manchuria property (the "Property"). To exercise this Option, Astra must invest a minimum of US$3.0M into the Property and make a cash payment of US$5.0M.

The La Manchuria Property, spanning over 5,600 hectares, is a gold and silver asset owned by Patagonia Gold S.A. ("PGSA"), a subsidiary of the Company. Situated in the Deseado Massif geological region of the Santa Cruz Province in southern Argentina, the Property is highly prospective.

According to the Technical Report, it contains an indicated mineral resource of 474,000 tonnes grading 2.59 grams per tonne (g/t) of gold and 129 g/t of silver, alongside an inferred mineral resource of 1.84 million tonnes grading 1.3 g/t of gold and 40 g/t of silver.

Summary of the Terms of the Option Agreement

  • According to the Option Agreement, Astra has the opportunity to earn up to a 90 % managing, joint venture interest in the Property over a six-year period, with the option to extend this timeframe as per the Agreement. This will be achieved by fulfilling specific Earn-In Obligations.
  • A 45-day due diligence period will begin once the Company secures written approval for the Option from the holder of the existing 2.5 % Net Smelter Return (NSR) royalty over the Property and from the Santa Cruz Provincial authorities for the updated five-year work plan agreed upon by the Parties.
  • The Earn-In Obligations will take effect on the "Election Date," when Astra provides written notice to the Company and PGSA expressing its intent to proceed with the Option. Astra is required to spend at least US$3.0M in staged expenditures, including a non-discretionary US$150,000 within the first 12 months, on the exploration and development of the Property by the fourth anniversary of the Election Date. This timeframe can also be extended by Astra.
  • Upon meeting the Initial Earn-In Obligations, Astra will have the right to acquire an 80 % interest in the Property. After exercising this option, Astra and PGSA will hold 80 % and 20 % interests, respectively, in a joint venture company overseeing the Property.
  • Additionally, Astra can obtain a further 10 % interest by making a US$5.0M cash payment to Patagonia within two years of securing the initial 80 % interest. This is referred to as the Additional Earn-In Obligations.
  • The Company’s interest in the Property, whether 10 % or 20 %, will be maintained until a technical report compliant with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (NI 43-101) is published, defining an inferred mineral resource, an indicated mineral resource, or a combination thereof, totaling 1 million ounces of gold equivalent (AuEq).
  • If either Party's interest drops below 10 %, it will be converted to a 1 % NSR royalty.

We are pleased to have joined with Astra for further exploration and development of the Property, our gold and silver, exploration-stage property. This will allow the Company’s shareholders to realize value from further exploration and development of the Property and permit the Company to focus on its material projects, mainly Cap Oeste and Calcatreu.

Christopher van Tienhoven, Chief Executive Officer, Patagonia Gold Corp.

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