Agnico Eagle Mines (AEM) has agreed to sell its El Barqueno property in Mexico to Luca Mining for an initial payment of $10 million in Luca shares, the latter said Thursday.

The 32,000-hectare property has a historical resource estimate of 399,265 ounces of gold equivalent classified as indicated and 650,046 ounces classified as inferred, Luca said.

Luca said it will make up to $30 million in milestone payments, payable in cash or shares, plus up to $20 million based on gold-equivalent production.

Agnico Eagle will retain a 2% net smelter return royalty on areas containing the currently defined resources, with Luca able to reduce the royalty to 1% for $12.5 million, the company said.

The transaction is expected to close in Q4, subject to regulatory approvals, it added.