Great Panther Silver Ltd. (TSX:GPR,NYSEMKT:GPL) announced that it’s signed a two-year option agreement with Nyrstar NV (EBR:NYR) under which it can acquire a 100-percent interest in the Peru-based Coricancha mine complex.

As quoted in the press release:

The Coricancha Mine has been on care and maintenance since August 2013 and has fully permitted and operational 600 tonne per day flotation and BIOX® bio-leach plants along with supporting mining infrastructure. The property comprises more than 3,700 hectares in the prolific Central Polymetallic Belt and production at the mine dates back to 1906. Gold-silver-lead-zinc-copper mineralization (approximately 80% gold and silver) occurs as massive sulphide veins that have been mined underground by cut and fill methods.

Deal details include:

Under the terms of the option agreement, Great Panther made an initial cash payment of US$1.5 million on signing. A second option payment of US$1.5 million is due on the first anniversary of signing to extend the option for a second year. Should Great Panther exercise the option on or before the second anniversary, an already negotiated Share Purchase Agreement would take effect whereupon Great Panther would make a cash payment of US$5 million for 100% of the shares of Nyrstar Coricancha S.A.(plus the second option payment if not already paid). Nyrstar Coricancha holds all the assets of the Coricancha Mine Complex. There is a further contingent payment of US$4 million payable to Nyrstar under certain conditions. In addition to the cash payments, the option agreement calls for exploration expenditures of US$2 million in the first year of the option and US$3 million in the second year.

Robert Archer, president and CEO of Great Panther, commented:

The Coricancha option marks the beginning of an exciting new chapter in Great Panther’s development as we expand into Peru, the second largest silver producing country in Latin America. Coricancha represents a near-term production opportunity and the two-year option will allow us to gain comfort with the project without having to make an immediate and significant financial commitment in the current environment of low metal prices and depressed market conditions. We intend to commence surface drilling as soon as possible, focused on defining and expanding zones of higher grade mineralization, followed by underground drilling, development, and start-up evaluations.

Click here to read the full Great Panther Silver Ltd. (TSX:GRP,NYSEMKT:GPL) press release.