Barrick options Precipitate Gold’s Pueblo Grande Project
Precipitate Gold Corp. [PRG-TSXV; PREIF-OTC] has signed a definitive earn-in agreement for Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] to earn a 70% interest in Precipitate’s Pueblo Grande Project located immediately adjacent to Barrick’s world-class Pueblo Viejo gold-silver mine in the Dominican Republic.
To earn its interest, Barrick must incur a minimum US$10.0 million in exploration expenditures and deliver a qualifying Pre-feasibility Study prior to the sixth anniversary of the agreement. In addition, Barrick has agreed to subscribe for the Canadian dollar equivalent of US$1.0 million of Precipitate’s common shares in a private placement.
In accordance with the terms of the Agreement, to earn a 70% interest in the Project, Barrick must incur a minimum of US$10.0 million in qualifying work expenditures, complete a minimum of 7,500 metres of drilling before the sixth anniversary and deliver a qualifying Pre-Feasibility Study, all before the sixth anniversary.
Jeffrey Wilson, President and CEO, stated, “We are pleased to announce the agreement with Barrick whereby one of the largest gold mining companies in the world has agreed to a substantial earn-in arrangement to advance our 100%-owned Pueblo Grande Project to a Pre-Feasibility stage in exchange for a 70% interest. The work expenditure commitments and expeditious timeline to completion of a Pre-Feasibility Study supports the company’s belief that the Pueblo Grande Project represents an important and prospective land package warranting a substantial budget for extensive property-wide exploration and drilling.
“Precipitate will be carried for a significant retained interest with no cash outlay by the company. The injection of additional capital into the company from the US$1.0 private placement (C$1.39M) allows Precipitate to continue the advancement of its other 100%-owned Dominican Republic projects while gaining an important, long term shareholder with significant in-country prominence and expertise. Our exploration focus will immediately turn to near term drill targets emerging within the company’s nearby Ponton gold project and the ongoing advancement of existing targets at the Juan de Herrera project, immediately adjacent to GoldQuest’s Romero project.”
Upon satisfaction of the earn-in conditions and delivery of an exercise notice, Barrick and Precipitate will form a Joint Venture to be owned 70% by Barrick and 30% by Precipitate. At Precipitate’s election, which must be made within 120 days of the approval by the Joint Venture of a Feasibility Study, Barrick will be obligated to provide Precipitate’s portion of any debt financing or arrange for third party financing of Precipitate’s portion of any debt financing required to construct a mine described in the Feasibility Study in consideration for the transfer by Precipitate to Barrick of a 5% interest in the Joint Venture. Dilution of the company’s interest in the Joint Venture below 10% will result in the conversion of Precipitate’s interest to a 1.5% Net Smelter Return royalty on any concessions without pre-existing NSRs and a 1.0% NSR royalty on any concessions with pre-existing NSRs applicable to all recovered products.
Barrick has also subscribed for the Canadian dollar equivalent of US$1.0 million in a private placement of Precipitate’s common shares. Barrick will be issued 12,713,636 common shares of Precipitate at a price of $0.11 per share for gross proceeds of C$1,398,500. Upon closing, Barrick will control 12.02% of the company’s outstanding common shares (on an undiluted basis). Closing is subject to regulatory approval.
Precipitate Gold is focused on exploring and advancing its mineral property interests in the Pueblo Viejo Mining Camp and Tireo Gold Trend of the Dominican Republic.