Avrupa Minerals inks exploration alliance with Callinan Royalties

Avrupa Minerals (CVE:AVU) says it has signed an exploration alliance agreement with Callinan Royalties Corp (CVE:CAA) to fund exploration for new properties in Portugal as well as to advance work on its existing projects so as to attract more potential partners, bringing more value for its shareholders. 

The company, which has properties in Portugal, Kosovo and Germany that it is working to joint venture, holds a total of 16 exploration licenses in these European countries, including 10 in Portugal. It operates three joint ventures in Portugal, including the Covas partnership with Blackheath Resources (CVE:BHR), and the Alvalade joint venture with Antofagasta Minerals in the southern part of the country.    

"This agreement is a great way for Avrupa to generate new projects and advance them," said president and CEO Paul Kuhn in a statement released late Thursday. "We are pleased to have a new partner in Callinan and look forward to working closely with their geological team."

Under the terms of the three-year deal, Callinan will fund $150,000 of generative exploration in Spain and Portugal during the first year, and at its option, fund up to $100,000 in each of the two subsequent years. In return, Avrupa will give Callinan the option to get a 0.5% net smelter returns (NSR) royalty on any new projects acquired as a result of the work. 

If Callinan decides to fund an additional $150,000 in further exploration work on any of the new projects, the NSR royalty would bump up to 1.5%. After this, there is the possibility that the two parties would jointly fund the new projects on a 50/50 basis, with Callinan's NSR royalty and interest remaining unchanged. 

Callinan also has the option to fund additional exploration on Avrupa's existing properties, thereby earning a 1.5% NSR royalty in exchange for the $150,000 in financing.

According to the statement, Avrupa can also propose additional new prospect areas outside of Portugal, with Callinan being given the option to fund the exploration in those areas in return for the same royalty structure.

Last week, Avrupa said it closed a $600,000 financing, with the funds to be used to advance the company's project generation business model in Europe. The financing that closed late last Thursday, which was first reported in August and increased by $0.1 million in early September, involved both strategic investors, as well as management.                

Avrupa also recently announced that it had started phase 2 diamond drilling at its Covas tungsten joint venture in northwest Portugal, which is operated by the Canadian company and fully funded by partner Blackheath. The new drilling program, which will include up to 2,000 metres of drilling at up to 19 separate locations, will aim to expand known deposits and mineralization around the Covas property.