The property is the Santa Gertrudis gold project in Sonora, Mexico and is from GoGold Resources and is for US$12mln in cash. Metalla reckons there is strong potential to expand the resource at the 42,000-hectare land package. The property produced over 550,000 ounces of gold in the 1990s at an average head grade of 2.13 grams per tonne gold.
Agnico has 45 days to exercise its ROFR (right of first refusal). If Agnico fails to respond or waives its ROFR during the offering period, then Agnico will be deemed to have refused the offer.
"This acquisition enhances Metalla's strong development pipeline and adds a second royalty with Agnico as its counterparty, one of the premier gold mining companies in the world," said Brett Heath, president and chief executive of Metalla.
GoGold, at its option, has the right to take US$6mln of the purchase price in Metalla shares at a deemed price of 78 cents per share.
Closing is expected by the second half of the fourth quarter of 2018.
Northern Sonora has three northwest-trending mineralisation corridors, which each have distinctive features and Santa Gertrudis covers a potential strike length of 25km.
Agnico bought the property for US$80mln (C$105mln) in cash last year
In addition to the cash consideration, GoGold retained a 2% NSR on the property, 1% of which can be bought back at any time for US$7.5mln.
Metalla shares added 2.86% to stand at C$0.72.