Kenorland Minerals Ltd. [KLD-TSXV, 3WQ0] has entered into a definitive agreement with Thompson Creek Metals Co Inc., a subsidiary of Centerra Gold Inc. [CG-TSX, CAGDF-OTC]. Under the deal, Centerra has been granted to right to acquire up to a 70% interest in the Flora, Western Wabigoon, and Algoman projects in northwestern Ontario.
In a press release, Kenorland said Centerra would have the option to acquire an initial 51% interest in the projects by spending $10 million in qualifying expenditures within three years of the agreement, including $3.5 million within the first year. The first option requires at least 10,000 metres of diamond drilling during the earn-in period.
Upon exercising the first option, Centerra will hold an exclusive right to earn an additional 19% interest in the projects, bringing its total interest to 70%, by completing a preliminary economic assessment (PEA), as defined in National Instrument 43-101 standards of disclosure for mineral projects, based on a mineral resource of not less than 1.0 million ounces of gold equivalent, within seven years of acquiring the initial interest.
During the second option period, Centerra must incur a minimum of $100,000 in annual expenditures or provide equivalent value through cash or share payments to Kenorland. If Centerra elects not to exercise the second option, a 2.0% interest will revert to Kenorland, resulting in a 51% interest in the projects for Kenorland and 49% for Centerra.
Following completion of the second option and formation of a joint venture, Kenorland would retain a 30% free-carried interest through to the completion of a NI 43-101-compliant preliminary feasibility study. Thereafter, both parties would contribute on a pro rata basis to further development expenditures under a joint venture agreement. Should either party be diluted below 10%, their interest would convert to a 1.0% net smelter return royalty.
Centerra and Kenorland would enter into an industry-standard joint venture agreement for the projects upon the earlier of (a) the completion of the interest reversion; or (b) the acquisition of the second interest by Centerra.
Kenorland will act as the initial operator of the projects during the first option period, receiving a 15% management fee on applicable expenditures.
The Flora project covers 61,575 hectares and is located within the Kenora Mining District Western Ontario. It lies adjacent to the community of Sioux Narrows and 65 kilometres southwest of Dryden. It covers a significant strike length of metavolcanic and metasedimentary rocks along the regional Wabigoon Fault.
The Western Wabigoon project is a 71,140-hectare, district-scale greenfields exploration project located within the Rainy River District of western Ontario. The property represents an opportunity for grassroots discovery over a large area of converging deformation zones within a prospective greenstone belt.
The 96,845-hectare Algoman Project is located between Atikokan and Mine Centre in northwestern Ontario, north and south of Provincial Hwy. 11. The project was acquired through staking in 2023 and represents a significant strike length of prospective geology close to infrastructure.
Kenorland shares eased 0.50% or $0.01 to $1.97. The shares trade in a 52-week range of $1.98 and 89 cents. Centerra rose 0.51% or $0.05 to $9.80. The trades in a 52-week range of $10.58 and $7.72.
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