During earning in, Kennecott will have the right to make exploration and development decisions
Emgold Mining announces it has signed an Earn-In with Option to Joint Venture Agreement with Kennecott Exploration Company, a subsidiary of Rio Tinto, for the New York Canyon Property, Nevada. The Property hosts both copper oxide skarn and copper-molybdenum-gold-silver sulfide porphyry mineralization in three known targets – Longshot Ridge, Copper Queen, and Champion. Kennecott can earn up to a 75% interest in the Property by completing $22.5 million in exploration expenditures.
Key points of the Agreement include:
Kennecott will have an option (the “First Option”) to acquire a 55% undivided interest in the Property by incurring US$5.0 million in expenditures over a 5 year period, of which US$1.0 million is a committed expenditure that must be completed prior to the 18 month anniversary of the Agreement.
Kennecott will have a second option (the “Second Option”) to earn an additional 10% undivided interest in the Property (for a total of 65%) by incurring an additional US$7.5 million in expenditures over a 3 years period.
Kennecott will have a third option (the “Third Option”) to earn an additional 10% undivided interest in the Property (for a total of 75%) by incurring an additional US$10 million in expenditures over a three year period.
Any expenditure in excess of an option expenditure requirement in a given time period will be credited against subsequent option expenditure requirements. Kennecott may, at any time or from time to time, accelerate its satisfaction of the First, Second, or Third Option by paying Emgold money in lieu of incurring expenditures.
While earning in, Kennecott will have the right to make exploration and development decisions.
Kennecott must maintain the Property in good standing during the option period(s), including payment of BLM and County maintenance fees and any underlying property payments due to Searchlight Resource. Emgold currently has an underlying agreement to acquire a 100 percent interest in the New York Canyon Property from Searchlight, which required three payments over an 18 month period totaling CDN$300,000.
Kennecott will have the right to elect to form a joint venture with Emgold upon completion of either the First, Second, or Third Option. Upon establishing a Joint Venture each participant will fund the joint venture according to its participating interest, with Kennecott acting as the Manager of the joint venture. If a party’s participating interest falls below 10%, then such parties participating interest will be converted to a 1% Net Smelter Royalty, capped at US$25 million.
In addition, Kennecott has staked 265 unpatented mineral claims at New York Canyon. This is in addition to Emgold’s 152 unpatented mining claims and 21 patented mining claims. The 417 unpatented claims and 21 unpatented claims, totalling approximately 8,700 acres, are now combined under the Agreement and make up the Property.
David Watkinson, President and CEO of Emgold stated, “The Agreement with Kennecott represents another successful example of Emgold’s business strategy of acquiring assets, adding value and monetizing them through sale, option, joint venture or other business transactions. In this case, we are pleased to have Kennecott earn-in and, if successful, become a joint venture partner with Emgold and take the leadto advance New York Canyon.”
Source: Company Press Release