PERTH (miningweekly.com) – Junior Comet Resources has inked a binding heads of agreement with privately held El Alamo Resources over the Santa Teresa gold project, in Mexico, while also executing a non-binding term sheet for a $20-million gold streaming and royalty finance.

Comet on Thursday told shareholders that the acquisition of the Santa Teresa project would be completed in stages, with the company acquiring the first 50% interest on the satisfaction of a due diligence and the completion of an initial $6-million in financing from Raptor Capital International.

The remaining 50% interest in the project would be acquired on a decision to mine.

“Santa Teresa contains attractive near-surface high-grade gold mineralisation that is open along strike and at depth. Along with the non-dilutive development funding from Raptor, I believe, subject to completion of due diligence, the project has potential to add significant value to Comet,” said MD Matthew O’Kane.

The funding from Raptor would be conducted via a gold stream and royalty facility, for which non-binding terms have been negotiated. O’Kane said that proceeds would be used to fund development activities at Santa Teresa and the facility would be secured only against the gold project itself, and any further tenements acquired in the region.

The stream financing will require the delivery of 15 000 oz of gold for the initial $6-million funding, with deliveries to increase linearly with additional drawdowns beyond the $6-million. Once gold delivery is completed, Raptor will receive a 2.5% net smelter royalty from production from the Santa Teresa project.

A 1% net smelter royalty over all future licence acquired in the area of influence will also become due.

Comet has made it a condition of the project acquisition that the stream and royalty financing is concluded to its satisfaction.

Following the acquisition, Comet will assess near-term production opportunities within the Santa Teresa licence area and other licences proposed to be acquired in the El Alamo district, and if warranted, to start mining activities.

Santa Teresa currently has an existing inferred resource of some 64 000 oz at an average grade of 8.7 g/t gold.