South32, Orogen Royalties enter Generative Exploration Alliance agreement

Orogen Royalties announced that the Company has signed a multi-year Generative Exploration Alliance Agreement with a wholly owned subsidiary of South32 (SOUHY). The Alliance will focus on generating base metal targets in western North America. Orogen and South32 to collaborate on early-stage generative exploration focused on the discovery of significant, intrusion-related base metal deposits in underexplored areas in western North America; Initial $300,000 budget for generative exploration work to be funded by South32; Pre-Alliance land acquisition and exploration costs of approximately $181,000 incurred by Orogen to be reimbursed by South32; Projects selected within the Alliance area of interest will be subject to a five-year option agreement whereby South32 can earn a 100% interest in a Designated Project by funding $5M in exploration expenditures and making milestone cash payments of $2M. Orogen will retain up to a 2% net smelter return royalty, subject to a buydown of up to 0.5% for $5M. Orogen will operate the Alliance on behalf of both parties and identify exploration targets for evaluation by the Alliance’s technical committee. South32 will bear all costs of the Alliance, including pre-Alliance target development and land acquisition costs. Each Designated Project will be subject to a five-year option agreement whereby South32 can earn a 100% interest by funding $5M in exploration expenditures. Milestone cash payments of $2M, which are not a condition to exercise of an option by South32, are subject to the following schedule: $50,000 on the completion of 5,000 metres of drilling on the property; $100,000 on the completion of an aggregate 10,000 metres of drilling on the property; $150,000 on the declaration of an initial mineral resource on the property; $250,000 on the completion of a Pre-Feasibility Study; $450,000 on the completion of a Feasibility Study; and $1M on a positive investment decision by the board of directors of South32 in connection with the development of a mine. If South32 exercises an option over a Designated Project, Orogen will retain up to a 2% NSR royalty, subject to a buydown of 0.5% for $5M.