RTZ inks deal with Ecuadorian

Mining conglomerate RTZ (NYSE) intends to acquire a controlling interest in the Beroen gold property, west of Cuenca, Ecuador.

The current owner, Ecuadorian Minerals (TSE), has identified several areas with anomalous gold values, particularly in the Rio Blanco area.

The property consists of four concessions, comprising 40 sq. km immediately north of RTZ’s Canoas exploration concession.

The agreement calls for RTZ to be the operator and acquire a half interest in the property. In return, it must make cash payments of US$465,000 over four years and spend US$175,000 on work commitments over two years.

RTZ can earn another 15% by paying US$535,000 in cash and spending another US$825,000 on work to the end of the fifth year.

With the completion of a bankable feasibility study, RTZ can earn an additional 15% stake in the property, bringing the total interest to 80%. Ecuadorian can elect to fund its 20% interest at that time or else dilute its interest to a 2.5% net smelter return royalty (NSR).

RTZ also has the option to buy out the NSR prior to commercial production, with a cash payment equivalent to half the net present value of the royalty.