Saccharum Energy Corp (TSX-V:SHM) said Tuesday that it signed a letter of intent to acquire a controlling interest in Marifil Mines' (TSX-V: MFM) K-2 potash property in Neuquen Province, Argentina.
Under the terms of the agreement, Saccharum has agreed to pay an initial $10,000 for an exclusive 60 day due diligence period to visit the property, and also to purchase all of the shares of Oxbow, Marifil's Argentine subsidiary, for a price of one cent per share.
Marifil is then planning on restructuring its underlying agreement with Oxbow, whereby Saccharum will be able to earn a 75% interest in the K-2 property.
To earn the 75%, Saccharum will pay Marifil US$500,000 in cash, plus two million Saccharum common shares over three years. In addition, Saccharum must also spend US$4.5 million in work on the property over the next four years. Marifil will also be entitled to certain share bonuses once a resource estimate and feasibility study are completed.
"[The deal] allows us to access and evaluate what may be significant potash resources in the Southern hemisphere," said president of Saccharum, Johannes Kingma.
Indeed, Marifil has also agreed to give Saccharum the 'right of first offer' for the company's K-3 potash project, located in the neighbouring Mendoza Province in Argentina.
The earn-in agreement remains subject to board and regulatory approvals.
Separately, Saccharum announced that it has agreed to appoint to its board of directors Todd Montgomery and Brent Walter, the former president and CEO of Anglo Potash and a former director of Anglo Potash, respectively. Further, the company is planning on closing a private placement, in which it plans to raise up to $20 million.