The Conversation (0)
Kootenay Silver Inc. (TSXV:KTN) announced that it’s entered into an option agreement with a subsidiary of Antofagasta plc (LSE:ANTO).
Kootenay Silver Inc. (TSXV:KTN) announced that it’s entered into an option agreement with a subsidiary of Antofagasta plc (LSE:ANTO). Under the agreement, Antofagasta will have the option to earn up to an 80-percent stake in Kootenay’s BC-based Silver Fox property.
As quoted in the press release:
The terms of the Agreement grant Antofagasta the right to earn a 65% interest (“First Option”) by funding or incurring an aggregate total of US$2.5 million (the “First Option Expenditures”) in exploration expenditures on or before the fourth anniversary of the Agreement (i.e., September 29, 2019), of which amount US$125,000 is a firm funding commitment in the first year. Antofagasta has the right to accelerate the First Option Expenditures.
Upon exercising the First Option, Antofagasta will have the right to acquire a further 15% interest (“Second Option”) by incurring an additional aggregate total US$1.65 million in exploration expenditures within two years of the First Option exercise date. Upon the exercise of the Second Option Antofagasta will have earned an 80% interest and Kootenay will hold a 20% interest in Silver Fox under a joint venture basis under the terms of the Agreement. If Antofagasta decides not to exercise the Second Option, a joint venture based on a 65/35% interest will form under the Agreement in relation to the property. In connection with the Agreement, the Grubstake Agreement has been replaced and superceded, in relation to Silver Fox, by a new option agreement between the 100% owner of Silver Fox, Craig Kennedy (“Kennedy”), and the Company (the “Underlying Option Agreement”). Under the terms of the Underlying Option Agreement, the Company can acquire a 100% interest in Silver Fox by issuing 75,000 common shares to Kennedy by July 3, 2018 (the “Underlying Option”), subject only to a 2.0% net smelter returns royalty in favour of Kennedy (the “Underlying Royalty”). The Underlying Royalty is subject to a purchase right in favour of the Company, exercisable by the Company by paying$500,000 for each 0.5% of the Underlying Royalty.
Under the terms of the Agreement, the Company is obligated to exercise the Underlying Option prior to the exercise byAntofagasta of the First Option.
Click here to read the full Kootenay Silver Inct. (TSXV:KTN) press release.