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Arcas Copper / Gold Project

The Arcas project is located in the Antofagasta Region, 245 km northeast of Antofagasta city, a world class mining hub. The Project is situated in the Atacama Desert, the cordilleran transitional zone between lower desert and high cordillera, at elevations ranging between 1,500-3,800 meters. The Arcas concession block constitutes a combined area of approximately 51,600 hectares and falls along the greater West Fissure-Domeyko mineralized trend which hosts numerous world-class porphyry copper deposits (e.g. Chuquicamata, Collahuasi, El Abra, and Quebrada Blanca). Despite being located adjacent a major mineral belt, the Arcas Project has, to date, had little modern exploration and remains in a preliminary stage of exploration.

Aethon also owns an additional 9,300 hectares of granted exploration concessions (known as the Quiltro, Lia and Timón concessions) which are located near the Arcas Project and will remain wholly-owned by the Company. The Lia, Quiltro and Timón blocks host satellite (ASTER) spectral anomalies. Aethon believes these concessions are highly prospective as they are located proximal to key regional faults along this major productive copper trend.

Rio Tinto to fund up to US$25 million in exploration expenditures to earn up to a 75% interest in Arcas

On September 11, 2019, Aethon announced the execution of an Earn-In with Option to Joint Venture Agreement with Rio Tinto Mining and Exploration Limited / Agencia En Chile, a member of the Rio Tinto Group (“Rio Tinto”), to acquire an interest in the Arcas project in Chile. The Agreement allows Rio Tinto to acquire up to a 75% stake in Arcas, by incurring up to US$25 million in exploration expenditures.

The proposed exploration expenditures contemplated under this Agreement, would represent the first significant exploration program on the Arcas Project since the property was drilled by a subsidiary of Teck in 2010.

A summary of the key terms of the Agreement are as follows:

1st Option: If Rio Tinto incurs total project expenditures of US$4 million within 3 years, and makes aggregate cash payments to Aethon of US$300,000 during the first two years, it will have the right to acquire a 51% interest in the Arcas project (“Stage 1 earn-in project expenditure”) through the acquisition of 51% stock of a new company (“Opco”) that will be incorporated;

To exercise the option, Rio Tinto shall make the cash payments before the following dates:

2nd Option: If Rio Tinto incurs additional project expenditures of US$5 million over the subsequent 2 year period, it will have a right to acquire an additional 14% interest in Opco (holder of the Arcas project), resulting in its total interest being 65%; and

3rd Option: If Rio Tinto incurs additional project expenditures of US$16 million over the subsequent 3 year period, it will have a right to acquire an additional 10% interest in Opco (holder of the Arcas project), resulting in its total interest being 75%;

Under the terms of the Agreement, Rio Tinto shall have the right to form a Joint Venture (“JV”) with the following key terms:

All the properties are subject to an underlying 1.02% gross sales royalty in favor of the Chilean companies BLC, Prospex and Calisto, all of them owned and controlled by Mining Equity Fund, a Chilean fund controlled by Altius, as well as a 0.98% gross sales royalty to Altius Minerals Corp. (TSX:ALS).

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