Quaterra Resources Inc. (QTA:TSX.V; QTRRF:OTCQX) announced in a news release that its subsidiary, Six Mile Mining, signed two agreements for the right to purchase the 678 unpatented mining claims on the Butte Valley prospect in Nevada.
"With these agreements we have the opportunity to acquire a strategic land position over the Butte Valley copper-gold target on very reasonable terms and with no onerous long term financial obligations," said Quaterra President and CEO Gerald Prosalendis. "Butte Valley fits our acquisition profile. It hosts a large porphyry copper-gold system in a mining-friendly state with well-developed infrastructure and where it is feasible to permit, develop and build a mine. It can also be moved to a drill-ready stage relatively quickly because of previous exploration work."
One of the agreements is a lease agreement with North Exploration, a Nevada prospecting company, for 600 of the 678 Butte Valley unpatented claims. Quaterra paid $5,000 to lease the property until August 2020. After, Quaterra will pay $45,000 in August 2020, $50,000 in August 2021, $100,000 in August 2022 and $200,000 each in August 2023 and 2024. Quaterra has the option to purchase the property at any time for $600,000 minus the amounts it already paid.
North Exploration will retain a 2.5% net smelter returns (NSR) royalty. Quaterra may buy 1% of it for $1 million and, within the first 10 years, can purchase another 0.5% of it for $5 million.
The other agreement Quaterra signed is an option agreement with Ely Gold Royalties' subsidiary, Nevada Select Royalty, regarding the remaining 78 Butte Valley unpatented claims. During the five-year option term, Quaterra will pay Nevada Select $250,000 in six tranches: $15,000 on the effective date, $35,000 on the agreement's first anniversary and four payments of $50,000 on each of the agreement's second through fifth anniversaries. Quaterra will also reimburse Nevada Select for staking costs and pay the claim fees during the option period.
Should Quaterra exercise its option to purchase the 78 claims, it will afford Nevada Select a 2% NSR royalty. Subsequently, Quaterra could buy back 1% of it during the first 10 years for $10 million.
Quaterra also announced in a news release that another of its subsidiaries, Singatse Peak Services, signed two agreements to sell certain primary ground water rights tied to its copper property in Yerington, Nevada, for $1.88 million to Desert Pearl Farms and Desert Hills Dairy, two unrelated Yerington-based companies.
The two acquirers will deposit an amount of money into an escrow account and pay the remaining funds owed when the sales closes.
Upon closing, Singatse Peak will retain about 6,000 acre feet per year of primary ground water, which is permitted for mining on its 51-square-mile McArthur property in Yerington. Quaterra will use the sale proceeds to advance its McArthur copper project and for general administrative expenses.
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