4. Mineral Properties


	At September 30, 2019		At December 31, 2018
Mt Todd, Australia	$	2,146	$	2,146
Guadalupe de los Reyes, Mexico		—		275
	$	2,146	$	2,421

During October 2017, we entered into an agreement (the “Option Agreement”) to option our interest in the Guadalupe de los Reyes gold and silver project in Sinaloa, Mexico (“Los Reyes”) to Minera Alamos Inc. and its subsidiary Minera Alamos de Sonora S.A. de C.V. (“Minera Alamos”). In June 2019, the Option Agreement was assigned from Minera Alamos to ePower Metals Inc. by way of assignment agreement (the “Assignment Agreement”), with our consent. ePower Metals Inc. subsequently changed its name to Prime Mining Corporation (“Prime Mining”). The Assignment Agreement provides that in certain circumstances, the rights under the Option Agreement will revert from Prime Mining to Minera Alamos.

Pursuant to the terms of the Option Agreement and the Assignment Agreement, we granted Minera Alamos or Prime Mining, as applicable, (the “Optionholder”) an exclusive right and option right to earn a 100% interest in the Los Reyes project by:

making payments totaling $6,000, comprised of a payment of $1,500 made at the execution of the Option Agreement (the “Option Grant Date”); two successive payments of $1,500 each to be made at the one-year and two-year anniversaries of the Option Grant Date; and a final $1,500 payment to be made before the four-year anniversary of the Option Grant Date;

maintaining the concessions comprising the Los Reyes project in good standing;

fulfilling all obligations to the Ejido La Tasajera (the “Ejido”) as set out in the temporary occupation contract between us and the Ejido;

granting us a capped net smelter return royalty (“NSR”) on production from open pit mining (the “Open Pit NSR”) at rates that range from 1% (at gold prices of $1,400/oz or less) to a maximum of 2% (at gold prices above $1,600/oz) up to an aggregate of $2,000 in royalty payments;

granting us a perpetual NSR on production from underground mining (the “Underground NSR”) at rates that range from 1% (at gold prices of $1,400/oz or less) to a maximum of 2% (at gold prices above $1,600/oz); and

granting us the right to assume a 49% non-carried interest in an underground project if the Optionholder decides to develop an underground mine at the Los Reyes project (the “Back-in Right”).

The Option Agreement provides that all cash payments are non-refundable and optional to the Optionholder, and in the event the Optionholder fails to pay any of the required amounts as set out in the Option Agreement, or fails to comply with its other obligations, the Option Agreement will terminate and the Optionholder will have no interest in the Los Reyes project. Provided it is not in breach of the Option Agreement, the Optionholder may, at its discretion, accelerate the above payment schedule.

Subject to the Optionholder timely making all the option payments, and fulfilling its other obligations with respect to the Option Agreement, we will transfer 100% of the shares of the Company’s 100% owned subsidiary Minera Gold Stake S.A. de C.V., the entity which owns the Los Reyes project, to the Optionholder and the Open-Pit NSR and Underground NSR will be granted to us.

If the Optionholder discovers and decides to develop an underground mine at the Los Reyes project and we exercise the Back-in Right, we and the Optionholder have agreed to form a joint venture to develop and operate the underground mine. If the joint venture is formed, the Underground NSR will terminate.

In October 2018, the Company agreed to extend the due date for the second $1,500 option payment under the Los Reyes Option Agreement by six months to April 23, 2019, at which time the payment was made. As consideration for the deferral, the Company received an additional $150 in cash, $50 paid on October 24, 2018 and $100 paid on January 23, 2019. In addition, Minera Alamos paid interest of $67 at a rate of 1.5% per month on the unpaid balance of the $1,500 payment beginning January 24, 2019.

The Company has determined that control of the Los Reyes project has not been transferred for accounting purposes. Therefore, the first option payment of $1,500 received in October 2017 and the $150 for extension of the second option payment were accounted for as a reduction to carrying value. Receipt of the second option payment of $1,500 and interest of $67 during April 2019 reduced the carrying value to zero and resulted in recognition of $1,392 as a deferred option gain. The third Los Reyes project option payment of $1,500 was received from Prime Mining in October 2019. This receipt will be recorded as additional deferred option gain. In addition, potential royalty revenue and future option payments have not been recognized for accounting purposes.