Riverside Resources (RRI-V), Antofagasta enter alliance in Mexico
July 22, 2013 - News Release
Riverside Resources Inc. has signed a three-year, $1.8-million (U.S.) strategic exploration alliance with a wholly owned subsidiary of Antofagasta PLC for generative exploration in the major copper belt of northwestern Mexico in the eastern part of the state of Sonora. The alliance will focus on finding and developing new large copper deposits using Riverside's extensive technical knowledge of copper systems and strong generative exploration team strategically based in Hermosillo, Sonora, Mexico. Antofagasta will finance $600,000 (U.S.) on an annual basis for three years of generative grassroots exploration within a defined exploration area covering eastern Sonora, and parts of western Chihuahua and northern Sinaloa. The exploration area being explored by Antofagasta and Riverside is a continuation of the same belt that hosts more than 25 known deposits and mines north of the border in Arizona, and is also host to one of the world's top-10 (and lowest cash cost) copper producers in Grupo, Mexico. Properties that are identified and deemed to be of interest will become designated properties, whereby Antofagasta will have the opportunity to earn a 65-per-cent interest by completing a four-year, $5-million (U.S.) work program. Once earn-in on a designated project (DP) is completed, a one-time payment of $3-million (U.S.) will be made to Riverside and the property will then be advanced under a joint venture agreement (65 per cent/35 per cent).
The alliance will target properties containing primarily copper with possible minor amounts of gold, silver, molybdenum, lead, zinc, nickel and platinum-group metals. All properties identified by Riverside under the alliance that are not jointly pursued will then be available for Riverside to pursue on its own should Antofagasta decide it does not fit its strategic interests. All decisions relating to the alliance will be made jointly by the technical committee with Antofagasta holding a tie-breaking vote while sole financing. Unless otherwise specified, Riverside will be the designated operator for all exploration activities of the alliance. All property acquisitions will be in the name of Riverside's wholly owned subsidiary and transferred to a jointly held company once selected as a DP.
"Riverside and Antofagasta have built a strong relationship during our work together in British Columbia, and we now look forward to applying a similar partnership framework to our joint exploration efforts within the prolific Laramide copper belt of northwestern Mexico, which is the continuation of the many large copper mines in Arizona and extends southward into Sonora where this alliance will focus." said Dr. John-Mark Staude, president and chief executive officer of Riverside Resources.
Antofagasta and Riverside are already working in a generative grassroots exploration alliance in British Columbia where drilling is again set to commence in the second year of the B.C. alliance. The Mexico alliance with Antofagasta will draw from the vast databases, technical experience, and Riverside's exploration team and infrastructure already in place to rapidly deliver potential designated properties to Antofagasta for its evaluation for additional financing and advancement. Further details on the Riverside-Antofagasta Mexico alliance will be available on the company's website shortly.
Key designated project alliance terms:
Projects selected as designated project's will have deemed ownership of 51 per cent and 49 per cent for Antofagasta and Riverside, respectively. Antofagasta would then have to spend a minimum of $5-million (U.S.) within four years from the date the DP is chosen, with minimum annual expenditures as follows:
- $500,000 (U.S.) on or before the first anniversary of the effective date;
- An additional $700,000 (U.S.) on or before the second anniversary of the effective date (for a cumulative amount of $1.2-million (U.S.));
- An additional $1.5-million (U.S.) on or before the third anniversary of the effective date (for a cumulative amount of $2.7-million (U.S.));
- An additional $2.3-million (U.S.) on or before the fourth anniversary of the effective date (for a cumulative amount of $5-million (U.S.)).
Once Antofagasta has completed the earn-in requirements, Riverside would be entitled to receive a success fee of $3-million (U.S.) from Antofagasta within 90 days. The designated project would then be advanced with Antofagasta and Riverside holding 65 per cent and 35 per cent, respectively. If Riverside's interest in a designated project is ever reduced to 10 per cent or less, this interest will be converted to a 2-per-cent net-smelter-returns royalty.
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