Peru -- Bayovar 12 Project Royalty
Effective April 15, 2015, the Company purchased from Focus a production royalty, equivalent to a 2% net smelter return, on Focus's 70% interest in future phosphate production from the Bayovar 12 project located in the Sechura district of northern Peru. The purchase price for the royalty was US$1.0 million. Should the Company decide at any time in the future to sell the royalty, Focus 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$10.0 million has been paid and cumulative gold production from the Tambor Project has exceeded 100,000 ounces, the quarterly cash payments will be based on the then price of gold and the number of ounces of gold produced as follows:
Nicaragua -- Royalty
|Gold Price (US$)
||Per Ounce of Gold
|$1,501 - $1,750
|$1,751 - $2,000
|$2,001 and greater
In 2012, B2Gold and the Company entered into joint venture agreements on a 60% - 40% basis with respect to the Company's San Jose and B2Gold's La Magnolia properties in Nicaragua. The Company and B2Gold subsequently agreed to relinquish the La Magnolia concession. Effective June 30, 2015, the Company sold to B2Gold its 40% interest in the San Jose property in consideration of a 2% NSR royalty. B2Gold has the right to purchase one-half of the royalty for US$1.0 million.