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Mirasol signs a binding letter agreement with Newcrest Mining in Chile

Mining News - Published on Thu, 31 Jan 2019

Image Source: Canada Newswire
Mirasol Resources Ltd reported the signing of binding letter agreement with Newcrest International Pty Limited, a wholly owned subsidiary of Newcrest Mining Limited, for an Option to Farm-in on the Gorbea High-Sulfidation Epithermal gold projects (the "Project") in Chile. Mirasol's CEO Mr Stephen Nano stated "Newcrest is the ideal partner for our Gorbea projects. Subject to drill permitting, Newcrest will this year fund drill testing of two, large Mio-Pliocene belt HSE Au+Ag projects at Gorbea and under a separate agreement, at the Altazor project in northern Chile".

The Gorbea Agreement comprises a package of projects totaling 26,684 ha, including the Atlas Au+Ag and the Titan Au (Cu) lead properties, located in the Mio-Pliocene age mineral belt of northern Chile. NCM has the right to acquire, in multiple stages, up to 75% of the Gorbea Project by completing a series of exploration and development milestones and making staged option payments to Mirasol. NCM has committed to spend a minimum of USD 4 million and to complete a minimum of 3,000 m of drilling over an initial 18-month period. NCM will operate the exploration program at Gorbea.

NCM and Mirasol are working collaboratively to advance the drill permitting process at Gorbea and upgrade the exploration camp ahead of the planned Q1 2019 restart of the exploration program that will initially focus on the Atlas project, including detailed re-mapping, alteration vectoring studies, 60 line-km of CSAMT geophysics, and diamond core drilling.

Terms of the Agreement
Option phase:
USD 100,000 cash payment upon signing the Agreement;
NCM's minimum commitment is to spend US$4 million and drill a minimum of 3,000m in the first 18 months of the exploration program;
NCM will operate the Project and will receive a 5% management fee; and
At the end of the Option phase, NCM will have the right to exercise the Farm-in phase of the Agreement.

Farm-in phase:
Stage 1: NCM will make a cash payment to Mirasol of US$500,000, and will have the right to earn 51% of the Project over a 4.5-year period (total 6 years) by spending an additional USD 15 million (total US$19 million), which includes a minimum drilling commitment of 6,000 m to be completed within the first 2 years;
Stage 2: If NCM elects to proceed to Stage 2 of the Farm-in, it will make a cash payment to Mirasol of US$650,000 and have the right to earn 65% of the Project over an additional 1-year period (total 7 years), by funding the delivery of a positive preliminary economic assessment, in accordance with NI 43-101, on a resource of not less than 1 million ounces of gold at a cut-off grade of 0.30 grams per tonne (g/t);
Stage 3: If NCM elects to proceed to Stage 3 of the Farm-in, it will have the right to earn 75% of the Project over an additional 2-year period (total 9 years) by funding the lesser of either: (i) additional expenditures of US$100 million; or (ii) the delivery of a positive bankable[1] Feasibility Study, in accordance with NI 43-101;
Stage 4: After completion of Stage 3, Mirasol can elect to: (i) contribute its proportionate 25% share of further development expenditures, (ii) exercise a one-time equity conversion option to convert up to 10% of its equity into a NSR royalty at a rate of 2.5% equity per 0.5% NSR royalty (max 2% NSR royalty) and then contribute funding to advance the Company's remaining Project equity interest; or (iii) dilute. The rate of royalty dilution (up to 2% and triggered upon dilution of its interest to 10%) will be adjusted based on the percentage royalty acquired as part of the equity conversion option. NCM will hold a 0.5% NSR buyback right at fair market value exercisable on the conversion royalty or the dilution royalty.

After meeting the minimum commitment in the Option phase, NCM may terminate the Agreement at any time without liability. In the event that NCM should complete Stage 1, but elect not to proceed to Stage 2, NCM's 51% interest shall be adjusted to a 49% interest. If NCM completes Stage 2, but elects not to proceed to Stage 3, the 65% interest shall be adjusted to 60% and the parties may agree to halt further exploration or continue and contribute in proportion to their interests or be diluted.

The Agreement also contains other customary terms, including extension rights to increase the duration of each stage in return for cash payments to Mirasol, and pre-emptive rights provisions should either party elect to sell its interest in the Project.

Source :

Posted By : Rabi Wangkhem on Thu, 31 Jan 2019
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