Orogen Royalties Inc. (“Orogen” or the “Company”) is pleased to announce it has optioned the Sarape gold property in Sonora, Mexico to Minera Hochschild Mexico, S.A. de C.V., a subsidiary of Hochschild Mining PLC (“Hochschild”). Hochschild can earn a 100% interest in the Sarape project by making cash payments of US$5.35 million and completing expenditures of US$5.0 million over a five-year period. Upon exercise of the option, Hochschild will grant to Orogen a 3% net smelter return royalty (“NSR”) of which 1% can be purchased for US$2.0 million.
“This transaction with Hochschild demonstrates Orogen’s ability to develop a quality portfolio of organically created royalty assets in a cost-effective manner,” commented Orogen CEO Paddy Nicol. “Hochschild has considerable experience in the Americas and we welcome their expertise in advancing exploration on Orogen’s Sarape gold project. The Sarape project is a low sulphidation epithermal gold target located in the same valley as Premier Gold’s Mercedes mine, SilverCrest’s Las Chispas project and First Majestic’s Santa Elena and Ermitaño mines.”
Under the terms of the agreement Hochschild can earn a 100% interest in the Sarape project over a five-year period subject to the following terms:
Cash and Work expenditures
| Cash Payments ($US) | Cumulative Exploration Expenditures ($US) | |
| On signing | $50,000 | – |
| 12 months from signing | $50,000 | – |
| 18 months from signing | – | $500,000 |
| 24 months from signing | $50,000 | – |
| 36 months from signing | $100,000 | $2,000,000 |
| 48 months from signing | $100,000 | $3,000,000 |
| 60 months from signing | $5,000,000 | $5,000,000 |
Once Hochschild has earned a 100% interest in the Sarape project, it will grant to Orogen a 3% NSR of which 1% can be purchased for US$2.0 million. Hochschild will also make annual advance cash payments of US$50,000 to be set off against the 1% royalty buy-back. Orogen will be the operator for the first three years of the agreement.
About the Sarape project
Sarape is a gold-silver epithermal vein prospect located in the Rio Sonora valley of northern Mexico, an emerging gold-silver mining district that includes First Majestic Silver’s Santa Elena mine and Ermitaño gold-silver development project, Premier Gold Mines’ Mercedes mine and SilverCrest Metals’ Las Chispas project. Orogen (Evrim) staked Sarape in 2017 following First Majestic’s initial discovery of bonanza gold-silver grades at Ermitaño. The 53 square kilometre Sarape property covers two prominent quartz-carbonate veins with high-level epithermal geochemistry and vein textures: the six-kilometre long Sarape vein and the 2.6 kilometre-long Chiltepin vein. Initial mapping and sampling identified tan-green quartz with elevated gold-silver values on the eastern limits of the exposed veins suggesting proximity to a boiling zone with bonanza gold-silver values at depth.
A previous exploration partner optioned Sarape from Orogen (Evrim) in 2018 and completed eight drill holes testing a 380-metre-long section of the Sarape vein and an additional drill hole on the eastern extremity of the Chiltepin vein. The Sarape drill holes intersected vein textures, gold-silver values, pathfinder elements and vein widths up 23 metres indicative of a boiling horizon in a dilation zone between 100 and 350 metres below surface. Only three holes are interpreted to have tested this target level over a strike length of 150 metres. The single hole on the Chiltepin vein failed to intersect the vein at depth. The balance of the six-kilometre Sarape vein, including areas of anomalous pathfinder geochemistry and vein splays and flexures, remains untested as does the entire 2.6 kilometre-long Chiltepin vein. Recent work has also identified a fault scarp with veining in the projected intersection of the Sarape and Chiltepin veins 1.5 kilometres east of the exposed veins.
Qualified Person Statement
Orogen’s disclosure of technical and scientific information in this news release has been reviewed by Dave Groves, Vice President, Exploration for Orogen. Mr. Groves is a Certified Professional Geologist (#11456) with the American Institute of Professional Geologists and a Qualified Person under the definition of National Instrument 43-101.