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 In connection with the Agreement, the Grubstake Agreement has been replaced and superceded, in relation to Silver Fox, by a new option agreement between the 100% owner of Silver Fox, Craig Kennedy (“Kennedy”), and the Company (the “Underlying Option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.