Vancouver-based gold producer Inca One (TSXV: IO) announced on Thursday it has signed a one-year ore purchase agreement with Peru-focused gold explorer PPX Mining (TSXV: PPX).
Inca One currently operates two fully permitted mineral processing facilities in Peru, while PPX is in the process of restarting production at its Igor project in order to ramp-up to previous production levels.
In 2019, Inca One produced a combined 24,850 ounces of gold at its two processing facilities
Under the purchase agreement, PPX will deliver 40,000 tonnes (approximately 110 tonnes per day) of gold-bearing material over the duration of one year, with a minimum grade of 8 g/t gold, to Inca One’s Kori One processing facility. Initial shipments will commence during Q3 from PPX’s current stockpile.
In return, Inca One will provide a secured, advance payment based on certain milestones for up to $400,000 to PPX, as well as other customary conditions such as early termination fees and repayment options for both parties. In the event PPX does not deliver 20,000 tonnes in the first year, the supply contract will be extended to a total of 80,000 tonnes by the end of the second year.
PPX’s Igor project is permitted for up to 350 tonnes per day and has approximately 223,000 ounces of measured and indicated resources and 77,000 ounces of inferred resources. The miner has been operating in northern Peru for three years and has been looking to build a relationship with a government-approved processing facility with excess capacity to process their material and scale up as production increases.
“We are extremely pleased to secure a significant contract and establish this new relationship with a recognized and proven mining operator in Peru,” Inca One president and CEO Edward Kelly stated in a press release. “To provide context, Inca One processed 55,000 tonnes of material in 2019, and this contract represents approximately 73% of last years’ total throughput.”
In other words, the agreement would provide supply for approximately 25% of the total milling capacity of the company’s two plants, Kelly explained.
In 2019, Inca One produced a combined 24,850 ounces of gold at its Chala One and Kori One processing facilities, representing the fourth consecutive year of increased production by the company.
The company recently unveiled its plans to launch a new direct to consumer gold and silver bullion store in the coming weeks, which would allow retail investors to purchase physical gold coins minted exclusively by Inca One.
Shares of Inca One shot up 18.5% by midday Thursday. The company’s market capitalization is approximately C$17.9 million.