Avino Silver (TSX: ASM) has taken full ownership of their new La Preciosa project, which is found adjacent to their Avino Mine in Durango, Mexico. The firm this morning indicated that it has purchased and extinguished all outstanding royalties and contingent payment obligations on the property.
The arrangement has seen Avino spend $13.25 million in upfront consideration for the extinguishment of the royalty, followed by an $8.75 million payment that has been deferred for one year. The second payment is said to have already been accounted for under the existing royalty agreement with Deterra Royalties, who held the royalty.
The obligations settled are said to include a 1.25% net smelter returns royalty on the Gloria and Abundancia areas of the mine, as well as a 2.00% gross value returns royalty on all other areas of the mine. Also included in the settlement is the US$8.75 million payment that was previously required to be made no later than 12 months after initial production was achieved, and a payment of US$0.25 per silver equivalent ounce of new mineral reserves discovered outside of the current mineral resource area, which was subject to a cap of US$50 million.
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Upfront payment of the extinguishment is to be paid via cash on hand, while the second payment is to be made by the end of 2026 and is expected to also be funded via cash on hand.
“By eliminating the royalty burden immediately prior to commencing production, we believe we will generate meaningful returns on our investment by lowering La Preciosa’s operating cost profile, and ensuring that as much of La Preciosa’s value remains with the operator and its stakeholders. The incremental cash outlay of only US$13.25 million represents an acquisition that is accretive to Avino shareholders on a net asset value (NAV) per share basis,” commented David Wolfin, CEO of Avino Silver.
Avino Silver last traded at $5.58 on the TSX.
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