Aston Bay Holdings Ltd. (TSXV:BAY) signed a binding Memorandum of Understanding with a wholly-owned subsidiary of Antofagasta plc for the advancement of the Storm Copper and Seal Zinc projects in Nunavut. Under the MOU, Antofagasta has the opportunity to earn up to a 70% total interest in Storm. During Phase I, as part of and subject to the successful completion of the Offering, Antofagasta will purchase non-flow-through Units of Aston Bay at CDN$0.40 that is equal to gross proceeds of US$250,000.
As quoted in the press release:
The terms of the MOU are as follows:
- In Phase I, Antofagasta may spend a minimum of US$10 million in expenditures (inclusive of a private placement (see below)) over a period of six years, beginning on the Effective Date of the MOU, to earn in a 50.1% interest in Storm.
- Phase II provides that Antofagasta may spend an additional US$6 million over three years and provide a technical report in compliance with National Instrument 43-101 demonstrating an Indicated Resource of at least 15 million tonnes of copper-bearing rock, at a 0.2% copper cut-off, to earn an additional 19.9% interest, for a total 70% interest in Storm.
- Phase III will immediately follow Phase II and provides that Antofagasta will fund all expenditures including a minimum of US$1 million per year for the period of two years following the completion of a possible Feasibility Study. If Antofagasta elects not to proceed during Phase III, Aston Bay can buy back Antofagasta’s interest for 130% of expenditures that Antofagasta has funded to that point. Alternatively, Aston Bay can maintain its 30% interest and take control of the technical committee or board of the operating company by paying to Antofagasta US$1 million.
- Phase IV will commence two years after the delivery of a possible Feasibility Study, and both Aston Bay and Antofagasta will pay their pro rata shares of expenditures, according to their respective interests in the Storm project.
Aston Bay President and CEO, Benjamin Cox, said:
We are pleased to have attracted a well-respected and technically-driven partner that has a track record of building and operating copper mines. Our agreement with Antofagasta will advance the Storm project without significant dilution expected for Aston Bay’s shareholders and will leave Aston Bay with a meaningful interest in the project.
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