Platinex Inc. (CSE:PTX) told investors it has entered into a binding heads of agreement with Fancamp Exploration Ltd to advance the exploration and development of some of their gold mineral properties in the Timmins mining camp in Ontario.
The company noted that the transaction includes several components, under which the two parties will transfer certain mining properties to South Timmins Mining (Goldco), currently a 100% wholly-owned subsidiary of Platinex, and enter into a shareholders' agreement for the operations of Goldco.
Under the terms of the transaction, Platinex said it will also conduct a non-brokered private placement of flow-through units, as well as a private placement of non-flow-through units, through which Fancamp will subscribe for 9.5% of the issued and outstanding shares of Platinex.
"The Transaction achieves a number of goals for Platinex,” Platinum CEO Greg Ferron said in a statement. “It creates a stronger gold-focused growth vehicle in a world class Ontario gold camp and brings in a strong joint venture partner, Fancamp with access to capital and technical expertise, allowing us to accelerate exploration at Shining Tree Gold Project".
READ: Platinex expands Muskrat Dam Property in Ontario; appoints Fred Breaks as technical advisor
Details of the transaction
Property transfers
- Platinex will transfer its district scale Shining Tree gold mineral project to Goldco in return for 75% of the issued and outstanding shares of Goldco. Fancamp will transfer its Heenan Mallard gold properties and its Dorothy Gold project in return for 25% of Goldco. Fancamp will also have an option to increase its shareholding to 50%; and
- Fancamp will be granted a 1% net smelter returns royalty in respect of the Swayze Properties and the Dorothy Properties, subject to a decrease to 0.5% should it elect to exercise the option to acquire 50% of Goldco.
Goldco operations and shareholders' agreement
- Platinex and Fancamp will enter into a shareholders' agreement with respect to their ownership interests in Goldco;
- The board of Goldco will consist of three directors, including two appointed by Platinex and one by Fancamp;
- Platinex will be the initial operator of Goldco mining activities;
- Platinex will have the right to appoint two members and Fancamp the right to appoint one member to a management/technical committee;
- Goldco will engage in an initial exploration program of C$1.1 million to be funded by the Platinex financings and an additional sum of $130,000 to be advanced by Fancamp. Platinex will contribute a minimum of $940,000 to Goldco in respect of Goldco’s operation;
- Within 60 days from the completion of the initial exploration program, Platinex will prepare an exploration program to be approved by all of the members of the technical committee and the board of Goldco;
- Fancamp will have the right and option to increase its ownership interest in Goldco to own up to 50%, which may be exercised over a two-year period commencing on the date of approval of a Phase II exploration program by making staged cash payments to Goldco in the aggregate amount of C$1.5 million be used for exploration activities; and
- If Fancamp exercises the option in full and acquires 50% of the issued and outstanding shares in Goldco, it will assume the role of operator.
In addition, on the closing date of the transaction, Platinex said Fancamp will have the right to nominate one director to its board of directors, as long as it holds at least 7.5% of company's issued and outstanding shares, calculated on a non-diluted basis.
Platinex financings
Platinex said it will conduct a non-brokered private placement raising up to $1.5 million at a price of $0.04 per unit through which Fancamp will acquire about 9.5% of its stock. It will also will also conduct a non-brokered private placement of flow-through units for an additional $1 million at a price of $0.045 per flow through (FT) units.
Each unit will include one common share and one half of one common share purchase warrant, with each whole warrant exercisable into one common share of the company at a price of $0.055 at any time on or before the date which is 60 months from the closing of the Non-FT offering.
The company said the gross proceeds of the FT offering will be used to incur eligible "Canadian exploration expenses" that will qualify as "flow-through mining expenditures" for gold projects including the Shining Tree Properties and Swayze Properties on or before December 31, 2024.
“The newly acquired Heenan Mallard Gold project which borders IAMGOLD’s Côté Gold Project, and the Shining Tree Gold Property are expected to be the first projects to be drilled,” Ferron continued. “The transaction provides a clear strategy for the enhanced gold portfolio while retaining a 100% ownership of our high-quality W2 Ni-Cu project and the recently acquired Muskrat Dam Critical Minerals Project."
Subject to any regulatory approvals or filings, Platinex said the transaction is expected to close on or about February 24, 2023.
“Fancamp is pleased to join hands with Platinex by combining their respective properties in the SW Abitibi Greenstone Belt, Canada’s largest gold producing region,” Fancamp CEO Rajesh Sharma said in a statement. “This transaction is a continuation of Fancamp’s strategic process of creating value from its vast portfolio of mineral properties by either optioning out, entering joint venture or monetizing its assets.”
Fancamp is a growing Canadian mineral exploration corporation dedicated to its value-added strategy of progressing priority mineral properties through exploration and innovative development. The corporation is focused on an advanced asset play poised for growth and selective monetization with a portfolio of mineral claims encompassing over 158,000 hectares across Ontario, Quebec and New Brunswick, Canada; including copper, gold, zinc, titanium, chromium, strategic rare-earth metals and others.
Platinex creates shareholder value through the opportunistic acquisition and advancement of high-quality projects in prolific Ontario mining camps. The company’s current assets include a 100% ownership interest in the 160 square kilometre (km2) district-scale W2 Copper-Nickel-PGE Project in the Ring of Fire and a 100% interest in the 225 km2 Shining Tree Gold Project in the Abitibi region of Ontario, a world-renowned gold district.
Contact the author at stephen.gunnion@proactiveinvestors.com