09:27 AM EDT, 04/04/2024 (MT Newswires) -- Santacruz Silver Mining Ltd. ( SZSMF ) said Thursday that it has entered into a binding term sheet with certain Glencore entities to amend certain transaction documents in connection with the previous sale by Glencore of its Bolivian mining assets to Santacruz.

Under the term sheet, the total consideration payable by Santacruz to Glencore under the term sheet will be instead of all present and future amounts owing or payable by Santacruz under the transaction documents entered into under the transaction.

Subject to the acceleration option, Santacruz will pay up to US$80 million in cash to Glencore in eight equal annual installments of US$10 million each. The first payment will be made by Nov. 1, 2025.

Santacruz can exercise an option to accelerate the payment of the outstanding balance of the base purchase price in full at any time. Such prepayment amount will be US$40 million if exercised before Nov. 1, 2025. The amount will decrease by US$2 million for each annual installment of US$10 million, which has been paid by Santacruz.

Santacruz granted a contingent value right to Glencore, under which Santacruz will pay Glencore a monthly payment of about US$1.3 million, subject to a total cap of US$77.7 million if, in any calendar month after the date the parties enter into the term sheet, the average LME spot price of zinc in the calendar month is at least US$3,850 per ton. The CVR payment will increase by US$83,333.33 for each increase of US$100 per ton above the base price and up to a price of US$5,049.99 per ton.

If the average LME spot price of zinc in a calendar month is at least US$5,050 per ton, Glencore will be entitled to certain additional payments..

When the monthly average zinc LME spot price exceeds the base price, Glencore can require Santacruz to hedge a limited amount of zinc production from its Bolivian mining operations.

The CVR and additional payments will be effective from the date of the term sheet until Dec. 31, 2032. The additional payments will terminate once Santacruz is no longer obligated to make CVR payments, the company said.