The purpose of the Agreement is to fund prospect generation activities in order for RenGold to attract joint venture partners to projects, while allowing Callinan to generate and acquire royalties.
The initial geographic focus will be southern Nevada but may expand to other jurisdictions. The Agreement will be for an initial three year term and calls for Callinan to fund $150,000 of generative exploration during the first year of the Agreement with the option to fund up to $100,000 in each of the two subsequent years.
In return for such funding, RenGold will grant Callinan the option to receive a 0.5% Net Smelter Returns ("NSR") royalty on any new projects acquired as a result of the generative exploration work. Alternatively, Callinan has the option of funding an additional $150,000 on any of the new projects in exchange for a 1.5% NSR royalty.
If RenGold proposes that additional value can be generated after spending $150,000, Callinan may elect to contribute subsequent funding with RenGold on an equally shared basis with no change to Callinan’s royalty interest. RenGold may also propose exploration on their existing mineral properties. Callinan will have the option to fund $150,000 in exploration on those projects in return for a 1.5% NSR royalty.
Richard Bedell, President and CEO of RenGold, comments: "Renaissance has been successful in generating shareholder value through the joint venture business model. This agreement is a modification of that model and will allow Renaissance to benefit from the downturn in the industry by being proactive with no shareholder dilution. Callinan is also currently a shareholder that understands our business and we consider them a long-term investor."
