TSX-V-listed Luca Mining Corporation has entered into a definitive asset purchase agreement to acquire Agnico Eagle Mines' El Barqueño property, in Mexico.

The property covers 32 000 ha in the state of Jalisco, hosting about 399 265 oz of gold-equivalent.

Luca believes the El Barqueño acquisition will be a highly strategic and accretive transaction for the company as it adds a high-quality and high-grade gold/silver project to its portfolio of mining assets in Mexico.

Luca will issue shares to the value of $10-million to Agnico as an initial consideration, while a deferred consideration of $30-million through milestone-linked payments will be due in cash or through the issue of more shares.

Additional considerations of up to $20-million will be due - comprising $5-million for every 100 000 gold-equivalent ounces (GEOs) produced at the project up to a maximum of 400 000 GEOs.

Agnico has also been granted a 2% net smelter return royalty on all metal production from certain areas of the property. Luca will have the right to repurchase half of the royalty for $12.5-million.

"This acquisition aligns with our growth strategy to use our specific in-country skills and experience to derisk mining projects, adding value and realising benefits for all stakeholders. Luca is uniquely positioned to create value at El Barqueño and we will use our expertise to advance permitting efforts at the project, which we believe is amenable to both openpit and underground mining methods," says Luca CEO and director Dan Barnholden.

Luca exploration VP Paul Gray adds that El Barqueño is a property with excellent infrastructure, a first-class geologic and exploration database, and numerous high-priority targets that require follow-up exploration.

He confirms that, upon receipt of exploration permits, Luca's exploration team will build on substantial historic exploration efforts. "We are confident that the El Barqueño property will yield many additional exploration discoveries over the coming years," Gray states.

LEGAL ISSUE

Luca advises that the El Barqueño property is not currently permitted for exploration drilling owing to the existence of the Jalisco Regional Ecological Territorial Planning Programme (POETR) which covers portions of the project. 

A direct amparo proceeding has been instituted before the Fourth District Court for Administrative Matters in the state of Jalisco regarding the application of the POETR on the relevant concessions, which were granted prior to the creation of the POETR.

An Amparo proceeding is a well-established legal process in Mexico through which acts or omissions of government authorities may be challenged on constitutional grounds.

Luca is working with Agnico regarding the ongoing Amparo and intends to continue pursuing a legal pathway to address the application of the POETR to the project.

Luca looks forward to a successful resolution to the POETR and the reconfirmation of the exploration and development pathway for El Barqueño, which will allow the project to deliver substantial economic and social benefits to the state of Jalisco and local host communities.