Happy Creek Minerals Ltd. (TSX-V:HPY, OTC:HPYCF) has finalized the sale of its Highland Valley Project to Metal Energy Corp (TSX-V:MERG, OTCQB:MEEEF), receiving an initial cash payment of $300,000 and equity in Metal Energy as part of the deal.
The transaction grants Happy Creek 11.7 million shares in Metal Energy, representing 9.9% of the company’s issued capital, and additional equity payments worth up to $6 million over the next four years.
Equity payments that would raise Happy Creek’s stake beyond 19.9% will instead be paid in cash, the company noted in a statement.
As part of the agreement, Happy Creek also retains a royalty arrangement of up to 2.5% on net smelter returns (NSR) from future production at Highland Valley. Metal Energy retains the option to buy back 1.5% of the NSR for $5 million.
Metal Energy has committed to initiating exploration at Highland Valley, with a minimum spend of $250,000 to be completed by year-end. The property purchase agreement also stipulates that Metal Energy must meet specific financing targets totaling $2.5 million within the next year to retain its interest in the project.
Happy Creek CEO Jason Bahnsen told shareholders the company was “delighted” to close the sale.
“The initial cash and equity consideration payments received have a positive impact on Happy Creek’s balance sheet and position Happy Creek shareholders with direct exposure to further exploration success at the Highland Valley Project,” Bahnsen said in a statement.
“Metal Energy has hit the ground running and is planning to complete an initial exploration program at Highland Valley before the end of the year.”
Bahnsen will join Metal Energy’s board as a non-executive director at the next annual general meeting.
Following the sale of Highland Valley, Happy Creek’s portfolio includes the high-grade Fox Tungsten deposit, the Silverboss molybdenum-copper-gold-silver project adjacent to Glencore’s closed Boss Mountain molybdenum mine and the adjacent Hen-Art-DL gold and silver project.