American Eagle Gold Corp (TSX-V:AE) said it has closed the previously announced exploration option transaction under an agreement dated October 11, 2022, which sees Orefinders acquire a 20% interest in the company's NAK copper-gold porphyry project, consisting of five mineral claims located northeast of Smithers, British Columbia.
Under the option agreement, Orefinders has carried out an aggregate of $1 million in work obligations to enable the carrying out of exploration work on the project. The completion of the work obligations on December 21, 2022, has resulted in the granting of the interest to Orefinders.
The work obligations were incurred primarily through third-party contractors and for drilling, drill-related work, geophysics, reports and sampling, and all services in support thereof, and also included necessary maintenance and carrying costs including taxes or fees levied by the Province of British Columbia and its agencies and the local municipality (but not sales taxes or taxes on income or profits) relating to the project.
READ: American Eagle Gold completes its 2022 drill program at the NAK Project in west-central British Columbia
Orefinders' interest in the project is subject to two separate net smelter royalties on the project. A 2% net smelter royalty on the project is payable to Bernard Kreft, which American Eagle has the right to buy back half (50% of the aforementioned 2% thereof), at a price of $1.5 million.
The interest in the project is also subject to a 1% net smelter royalty on the project, payable to 1302580 B.C. Ltd, which American Eagle has the right to buy back half (50% of the aforementioned 1% thereof), at a price of $1 million.
Under the previously announced call option agreement between American Eagle and Orefinders dated the same date as the option agreement, American Eagle shall, subject to prior approval of the TSX Venture Exchange, have the right to reacquire the interest from Orefinders at any time after February 28, 2023, but before April 30, 2024.
The purchase price payable by American Eagle to Orefinders for the interest on the closing date is $1.5 million, which may be paid, at the sole option of American Eagle, in cash or in common shares of American Eagle. The exercise of the call option and the completion of the transfer of interest from Orefinders to American Eagle shall be subject to the prior approval of the exchange. There is no assurance that exchange approval of the call option will be obtained.
No finders' fees will be paid in connection with the option agreement.
American Eagle is focused on exploring its NAK project in the Babine copper-gold porphyry district in central British Columbia.
The project is a classic porphyry target that exhibits all the signs of a large copper-gold system. Copper-gold porphyry mineralization at the project is open in all directions. It is defined by a compelling geophysical signature analogous to Newcrest's Red Chris mine and Newmont's Saddle deposit located in Northwest British Columbia.
Contact the author at jon.hopkins@proactiveinvestors.com