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Energizer Resources Inc. (TSX:EGZ,OTCQX:ENZR) entered into a purchase and sale agreement with Honey Badger Exploration, Inc. (TSXV:TUF) to sell a 75% undivided right, title and interest in the “Sagar” Project in Quebec.
As quoted in the press release:
Terms of the Agreement
- In order to acquire a 75% interest in the Sagar Project, Honey Badger must satisfy the following terms within the specified timelines outlined in the agreement:
- Within 15 days of the later of Honey Badger completing a financing and obtaining required exchange approvals Honey Badger shall make a cash payment of $1,500,000 and issue of 6,750,000 common shares, which represents 9.5% of Honey Badger’s current issued and outstanding common shares,
- A further cash payment of $1,500,000 is due within 18 months of the effective date of the agreement,
- Issue additional common shares to increase Energizer’s aggregate equity interest in Honey Badger to 15% of the issued and outstanding shares of Honey Badger within 15 days of the requisite shareholder approval, with a proposal to issue up to an aggregate of a 19.5% equity interest being tabled at the next Honey Badger annual general meeting of shareholders, expected to be held in June 2014. Honey Badger would be required to maintain Energizer’s aggregate 15% equity position for a period of 3 years from the effective date of the agreement,
- If shareholder approval is not obtained, then Honey Badger will pay Energizer an additional sum of $500,000 within 18 months of the effective date of the agreement in lieu of shares, and Honey Badger will be required to maintain Energizer’s 9.5% equity position for a period of 3 years from the effective date of the agreement, and
- Honey Badger is provided with a future option to purchase the remaining 25% interest of the Sagar Project from Energizer. If exercised, Honey Badger will pay Energizer the sum of $1,000,000 and issue additional shares of its common stock to increase Energizer’s aggregate interest to 19.5% of Honey Badger’s issued and outstanding common stock within 15 days of requisite shareholder and regulatory approval. Energizer has been granted a first right of refusal to maintain its equity position by participating in any future private placements and will also retain a 2% net smelter royalty on the property, of which 1% of the NSR could be bought back by Honey Badger for $1,000,000. If the option is not exercised, than the Parties agree to enter into a joint venture agreement consistent with industry norms for such arrangements including a standard dilution clause. Energizer would then also be entitled to a free carried interest on its 25% participating interest until the delivery by Honey Badger of a Bankable Feasibility Study or equivalent.
Energizer President and COO, Craig Scherba, said:
We are 100% committed and focused on developing a graphite mine at our flagship Molo deposit in Madagascar. The sale of a portion of the Sagar Project will inject additional capital into the Company in a non-dilutive manner and provide an opportunity to realize more value from a secondary property asset.
Click here to read the Energizer Resources Inc. (TSX:EGZ,OTCQX:ENZR) press release
Click here to see the Energizer Resources Inc. (TSX:EGZ,OTCQX:ENZR) profile.