Wallbridge Mining options Detour East to Kirkland Lake Gold
Wallbridge Mining Company Ltd. [WM-TSX; WC7-FSE] has entered into an option agreement for its Detour East gold property with Kirkland Lake Gold Inc., a wholly owned subsidiary of Kirkland Lake Gold Ltd. [KL-TSX, NYSE]. Kirkland can earn a 75% interest in Detour East by spending $35 million on the property..
Wallbridge will grant Kirkland the option to acquire up to an undivided 50% interest in the property by funding Phase 1 expenditures of $7.5 million over five years with a minimum commitment of $2.0 million in the first two years ($0.5 million by the first anniversary and $1.5 million by the second anniversary of entering into the option agreement. During the option period, Kirkland will act as operator of the property.
Upon satisfaction of the option, Wallbridge and Kirkland shall form a joint venture with Kirkland acting as the operator of the JV to carry on operations on the property.
Upon the formation of the JV, Kirkland can acquire an additional 25% interest in the property by spending another $27.5 million within the first five years of the formation of the JV.
Upon Kirkland having spent an additional $27.5 million during the Second Stage option period, Kirkland shall have earned an undivided 75% interest. The deemed expenditures on the property shall be Kirkland ($35,000,000) and Wallbridge ($11,666,667). Following the completion of the Second Stage option period, any additional funds required will be contributed by the Joint Venture parties based on their then proportional V interests. Should either Wallbridge or Kirkland not fund a program, its JV interest will be diluted pro-rata. If a party commits to fund a program, and fails to contribute its share of the funding, that Party’s JV interest will be diluted at three times the pro-rata rate.
If either party’s JV interest is reduced to 5% or less, that party’s Joint Venture interest shall be automatically converted to a 1% net smelter return royalty and the Joint Venture shall be automatically terminated. The surviving party shall have a right of first offer with respect to the purchase or sale of the NSR by the non-surviving party.
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