BHP Funding Agreement

The four projects include the previously highlighted: Chuin, Palofierro, Sinoquipe, and Peñitas properties. The projects have now been approved for full funding to move toward further exploration on the Chuin and Palofierro projects and deep geophysics on the Sinoquipe and Peñitas projects which would lead toward additional drill decisions in the near future and will be ongoing for a third consecutive year. Sinoquipe and Peñitas will be progressed with geophysical studies similar to those done at Chuin and Palofierro where BHP and Riverside are preparing targets for upcoming drill programs.

 

Riverside signed an option agreement to acquire 100% interest of the 98 km2 Llano de Nogal project from Orogen Royalties. The Llano de Nogal Project has become the fifth active work project within the EFA. The new project will have an exploration budget of USD $1,000,000 for the initial work phase of geology, geophysics and geochemistry. Under the terms of the EFA, BHP can earn up to 80% and Riverside up to a 20% interest into Orogen’s mineral concessions of Llano de Nogal by making cash payments totaling US$2.48 million and exploration expenditures of US$5 million over a six-year period with BHP fully funding all generative programs. BHP will fund all generative work to be completed in the Project through the EFA with subsequent work funded by both BHP and Riverside. If the option is fully exercised, Riverside will be entitled to acquire up to a 20% interest of the Project.

 

Riverside’s Llano del Nogal Project tenure is a land package fully owned by Riverside with indications for porphyry Cu and post-mineral Baucarit middle and late Tertiary gravel cover. Riverside’s tenure is located within the prolific Cananea-La Caridad porphyry copper trend. The Project is located 35 km northwest of the La Caridad mine that after 35 years of historic mining, has a measured and indicated mineral resource of over 6.4 Bt at 0.17% copper. The Project is also located 60 km southeast of the Cananea (Buenavista Mine), one of the world’s largest porphyry copper deposits with a total global resource of over 15Bt at 0.22% copper1 remaining after more than 120 years of continuous mining.

The EFA Program is structured such that Riverside can earn up to 20% and BHP can earn up to 80% in the Project which in this specific third party property option case by making cash payments of US$2.48 million and US$5.0 million in exploration expenditures subject to the following schedule which would give BHP-Riverside 100% ownership of the tenure, subject to NSRs:

 

During the option period, Orogen and Riverside will jointly have the right to exercise and retain any Net Smelter Return (“NSR”) royalty buydown rights with respect to the Suanse claims (0.5% NSR royalty for C$1 million) and the Coyotes claims (1.5% NSR royalty for US$1.5 million).

Once the Option is exercised on Llano de Nogal, the Optionee will grant to Orogen a 1% Production Royalty, of which 0.5% can be purchased for US$10 million within 10 years of the exercise date.

Once BHP has funded all exploration expenditures, other than those expenditures funded by Riverside, amounting up to US$5,000,000, and made other payments to Riverside it will have earned the conditions to convert to up to a 80% owner in a subsequent JV with Riverside. Once BHP has funded all generative expenditures in the Project, Riverside can elect to fund between 10% and 20% of the remaining exploration expenditures. At any time after the Generative program ends, BHP can request Riverside to transfer its rights and obligations under the Agreement for Llano de Nogal Orogen concessions to BHP Exploration Chile SpA (“BHP”) or its affiliates pursuant to the Exploration and Financing Agreement between BHP and Riverside dated May 15, 2019.

Riverside’s mineral concessions at the current time are still controlled by Riverside but may be added to BHP’s earn in interest in the future. Currently Riverside controls these 100% for Llano de Nogal.