Cayden Resources (CVE:CYD) has acquired an option to buy out the royalties on its Morelos Sur gold project, as part of a planned sub-division of the concessions into separate areas.
The Morelos Sur project is currently comprised of the Reduccion and Tenantla claims.
Cayden said its Mexican subsidiary will be applying to divide these concessions into three new parcels following an amending agreement signed yesterday with Industrial Minera Mexico.
The buy-out option was acquired as part of the amending agreement.
"We are pleased to have renegotiated fixed terms and buy-out options on the royalties associated with our Morelos Sur property," said president and CEO Ivan Bebek.
"The application to divide the Morelos Sur Concessions into three new parcels provides additional flexibility for Cayden going forward to be able to deal separately with these areas."
Under the original agreement with Industrial Minera, a 3.5% net smelter applied to the concession areas of Morelos Sur, Las Calles and Morelos East, consisted of 2.5% payable to the Geologic Service of Mexico and 1% payable to Industrial Minera.
An advance royalty payment of $200,000 to Industrial Minera starts in 2013 until the start of production, when the 1% net smelter return (NYSE:NSR) was to apply.
Under the revised royalty agreement, the Morelos Sur concession will be subject to the 2.5% NSR payable to the Geologic Service, but will now carry a 2% NSR payable to Industrial Minera, and an advance minimum royalty of $200,000 per year.
The 2% NSR and the advance royalty can be purchased for $7 million within the next 3 years or for $20 million anytime thereafter, Cayden said.
Meanwhile, the Las Calles concession will be subject to the 2.5% payable to the Geologic Service and a 2% NSR payable to Industrial Minera, which can be bought at any time for $3 million.
Finally, the Morelos East concession, which is comprised of an east block and a west block that surrounds Goldcorp's (TSE:G) Los Filos and El Bermejal mines, will be subject to the 2.5% royalty payable to the Mexican Geologic Service. The 1% payable to Industrial Minera has been purchased for $10,000.
The Morelos Sur project is located in the Guerrero Gold Belt, which is an emerging gold region in the southern State of Guerrero, Mexico, that extends roughly 60 km.
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