Mexico -- Tlacolula Property Royalty
In July 2017, the Company sold a 100% interest in its Tlacolula Silver Property, Mexico to Fortuna Silver Mines Inc. in consideration of US$150,000 cash, 239,385 Fortuna shares, and a 2% NSR royalty on future production from the Property. Fortuna retains the right to purchase one-half of the royalty for US$1.5 million.
Peru -- Bayovar 12 Project Royalty
The Company holds a production royalty, equivalent to a 2% net smelter return, on CROPS' 70% interest in future phosphate production from the Bayovar 12 project located in the Sechura district of northern Peru. Should the Company decide at any time in the future to sell the royalty, CROPS will have a first right of refusal.
Guatemala -- Tambor Project Royalty
In 2012, the Company sold its interest in its subsidiary, Exploraciones Mineras de Guatemala S.A., which holds the Tambor gold project in Guatemala, to Kappes, Cassiday & Associates ("KCA"), giving KCA a 100% interest in the project. In consideration therefor, KCA agreed to repay approximately US$400,000 owing to the Company (US$100,000 paid in 2012 and the balance to be paid once KCA has commenced shipment of gold produced from the property). Also upon commercial production, KCA is required to make quarterly royalty payments to the Company.
Commercial production commenced in late 2014 and accordingly, in January 2015, KCA paid to the Company US$341,063 as settlement for the outstanding receivable balance. Future quarterly royalty payments will be based on the current price of gold at the time and the number of ounces of gold produced as follows:
|Gold Price (US$)
||>Per Ounce of Gold
|$1,201 - $1,300
|$1,301 - $1,400
|$1,401 - $1,500
|$1,501 and greater
up to a maximum of US$10.0 million. After the US$10.0 million has been paid and cumulative gold production from the Tambor Project has exceeded 100,000 ounces, the quarterly cash payments will be based on the then price of gold and the number of ounces of gold produced as follows:
|Gold Price (US$)
||Per Ounce of Gold
|$1,501 - $1,750
|$1,751 - $2,000
|$2,001 and greater
Receipt of royalty payments by the Company commenced during the third quarter of 2015. However, on May 11, 2016, KCA informed the Company that mining operations were suspended by the Supreme Court of Guatemala due to a lack of consultation by the Guatemalan Ministry of Mines with local indigenous people when the mine was permitted in 2011. To date, the Supreme Court has not made a decision on when the mine may re-open, and a result, KCA has commenced legal proceedings against the Guatemalan government to overturn the suspension of operations and seek compensation from the Guatemalan authorities, from which the Company would benefit as well.