BTU Metals Corp revealed that it had forged a series of transactions with Kinross Gold Corp to boost exploration on the properties it owns in the Great Bear gold area southeast of the main Red Lake Gold camp in Ontario.
The Vancouver-based junior mining exploration company is focused on its flagship Dixie Halo project in Red Lake, which lies adjacent to the Kinross Great Bear project.
According to BTU, the transactions include a purchase agreement following which Great Bear Resources (TSX-V:GBR) Ltd (GBR), a wholly owned subsidiary of Kinross, acquired from BTU certain unpatented mining claims in Kenora with BTU continuing to participate in those lands through a newly created royalty payable to BTU.
READ: BTU Metals identifies 'multiple' new target areas at flagship Dixie Halo project, Red Lake
It also includes an option agreement, which provides GBR with an option to earn a 70% interest in certain unpatented mining claims held by BTU in the Kenora district. Finally, it encompasses a subscription agreement following which Kinross purchased 25 million shares of BTU at a price of C$0.05 per common share.
In a statement, BTU Metals CEO Paul Wood said: "We are very pleased to enter into this series of transactions with Kinross, which will: provide C$2.8 million in cash to the company by way of a private placement and property sale, accelerate the exploration of BTU's properties through an earn-in agreement of up to C$4.7 million, and, in all cases, leave substantial upside for BTU shareholders through a royalty package, and it’s at least 30% interests in the optioned properties of the Dixie Halo project.”
“BTU will support Kinross as they commence their exploration work on the optioned properties, and we are very pleased to have Kinross as a partner. The company is also in the process of sourcing, accepting, and assessing new and complementary minerals exploration projects," he added.
Subscription agreement
BTU has struck a subscription agreement with Kinross for gross proceeds of C$1.25 million in a private placement comprised of 25 million shares at a purchase price of C$0.05 per share. The proceeds will be used by BTU for investments and as working capital. The private placement closed on February 22, 2023.
Kinross became an insider after the private placement, and now holds 25 million BTU common shares, representing 17.5% of the company’s issued and outstanding common shares.
The shares will have a hold period of four months and one day from the closing date of the private placement.
Asset acquisition
BTU has also struck a purchase agreement with GBR for certain unpatented mining claims in the Kenora district. The 2,637-hectare properties consist of 39 Boundary Cell Mining claims, and 76 Single Cell Mining claims located to the south of the Great Bear project, as well as 2 Multi-Cell Mining claims.
In addition, BTU will hold Net Smelter Royalties (NSR) from 1.5% to 2.5% on these properties, as well as underlying royalty buy-back rights.
The sum payable by GBR is C$1.55 million in cash, with C$1.25 million due on closing, and an additional C$300,000 due on the one-year anniversary of the closing date.
GBR issued to BTU a variable 1.5% to 2.5% NSR royalty on the acquisition properties, such that each acquisition property will have a cumulative total of 4% NSR. BTU will maintain any existing third-party royalty buy-back rights linked to the acquisitions.
Option agreement
BTU has struck a property option agreement with GBR, following which GBR has the right to acquire an undivided 70% interest in and to 757 mining claims — 12 Boundary Cell Mining claims, 3 Multi-cell Mining claims, and 742 Single Cell Mining claims — covering 16,410 hectares of land in the Kenora district.
Investors can learn about the terms of the option agreement here.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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