Kenorland Minerals Ltd (TSX-V:KLD) announced that it has granted Sumitomo Metal Mining Canada Ltd, a wholly-owned subsidiary of Sumitomo Metal Mining Co Ltd, the option to acquire up to a 70% interest in the O'Sullivan project in Quebec.
The Quebec-focused exploration company said Sumitomo can earn an initial 51% interest in the project by incurring a total of $4.9 million in mineral exploration expenditures on or before the third anniversary of the option agreement, of which $1.2 million are guaranteed expenditures within the first three years.
Kenorland noted that following the earning of a 51% interest, Sumitomo has the option to earn an additional 19% (for a total of 70% interest), by delivering a NI-43-101 compliant Feasibility Study on the project disclosing mineral resources in the measured and indicated categories of not less than 1.5 million ounces of gold, or gold equivalent, within an additional seven years.
READ: Kenorland Minerals strengthens cash position to nearly C$20M
It added that once Sumitomo has earned a 70% interest in the project, Kenorland will have the option to forego a minority joint venture interest and immediately vest a net smelter returns royalty interest of 4% on the property.
As well, Kenorland said in the event of joint venture participation, any party which dilutes to below a 10% interest will exchange its joint venture interest for a net smelter returns royalty of 3% (subject to a 1% buyback for $1 million).
Kenorland will act as operator of the project in return for a management fee equal to 15% of the total expenditures during the first earn-in period, according to the company.
Kenorland Minerals is focused on early to advanced stage exploration in North America. The company currently holds four projects in Quebec, where work is being completed under joint venture and earn-in agreements from third parties.
Contact Sean at sean@proactiveinvestors.com