Poundmaker
The Poundmaker property consists of 72 claims covering approximately 12,176 hectares adjacent and to the east of the Company’s Goldridge properties.
In February 2008, the Company signed a five year option agreement (the “Poundmaker Agreement”) to earn up to a 100% interest in a portion of Wildcat Exploration Ltd.’s (“Wildcat”) Poundmaker property. The Poundmaker Agreement was amended on March 1, 2009 and extended for an additional year to March 2014. The Poundmaker Agreement may be terminated by the Company at any time, without penalty. Option consideration is comprised of cash plus common shares of the Company payable as follows:
$25,000 cash paid upon execution of the Poundmaker Agreement and 500,000 common shares of the Company issued on February 25, 2008 upon receipt of approval of the transaction by the TSX Venture Exchange and valued at $95,000 based on the trading price of the Company’s shares on the date of issue;
$50,000 cash paid in June 2008; and On the March 1, 2009 amendment date and each of the next five anniversary dates thereafter (March 1, 2010 through to March 1, 2014), at Wildcat’s option: i) $100,000 cash or ii) $50,000 cash plus up to 2 million common shares of the Company having a market value at the time of issuance of $100,000 (total value of $150,000).
The Company paid the first $100,000 in cash on February 27, 2009.
In addition, the Company has agreed to incur $5 million of exploration expenditures during the term of the amended Poundmaker Agreement as follows:
$500,000 prior to March 1, 2010 of which approximately $219,075 has been incurred at June 30, 2009;
An additional $1,500,000 prior to March 1, 2011; and An additional $1,000,000 in each year prior to March 1, 2012, 2013 and 2014.
Within 60 days of the Company providing notice to Wildcat that the Company has incurred $4 million of exploration expenditures, Wildcat may exercise a Participation Right to retain up to a 35% participating interest or to hold a 2% net smelter return royalty in the Property.
Upon the completion of the $5 million expenditure commitment, the Company may exercise its option (the “Option”) to have purchased a 100% interest in the property, subject to a 2% net smelter return royalty (“NSRR”) held by Wildcat.
If Wildcat does not exercise the Participation Right, within 120 days of the Company exercising its Option, Wildcat may exercise a Buy-Back Option to re-acquire up to 35% of the property for a one-time cash payment equivalent to the number of percentage points to be re-acquired multiplied by $200,000 (maximum 35% for $7 million). If the Buy-Back Option is exercised, Wildcat’s rights under the 2% NSRR are terminated.
The Company may elect to purchase up to one-half of the 2% NSRR by making a cash payment to Wildcat that, as a percentage of $2 million, is equal to the percentage of one-half that the Company elects to purchase.