Lion Copper and Gold Corp (TSX-V:LEO, OTCQB:LCGMF) reported that it has closed the previously announced deal to spin out its option on the Butte Valley porphyry copper-gold property in Nevada, USA to 1301666 BC Ltd.
The latter firm is in late-stage negotiations with a TSX Venture-listed Capital Pool Company for a possible business combination.
Lion CG received 16,049,444 common shares of 1301666 BC, it said in a statement.
Concurrently, 1301666 BC closed a private placing for gross proceeds of C$3,106,226, through issuing 15,531,130 units at C$0.20 each.
Each unit comprises one share and one non-transferable share purchase warrant, exercisable for 24 months at C$0.30 per share. In addition, Lion CG received a payment of US$500,000 from 1301666 BC as a reimbursement of exploration expenditures and related costs incurred by Lion CG on the Butte Valley property.
Lion CG is also entitled to receive a 1.5% net smelter royalty (NSR) on each of the two optioned properties.
READ: Lion Copper and Gold CEO discusses landmark agreement with Rio Tinto at its Nevada copper assets
In February this year, Lion CG said the option deal would give it an around 22% equity stake in the resulting listed issuer, assuming completion of financings for proceeds of about C$6 million.
"The Butte Valley property options were acquired by us in 2019 as a strategic acquisition with a view to finding a partner to advance exploration. The agreement with 1301666 BC Ltd achieves this objective," Lion CG chairman Tom Patton had said in a statement.
"We retain a significant interest in the advancement of the Butte Valley property, while continuing to focus on our core Yerington district copper assets, including the Macarthur copper project," he had added.
The company also pointed out that 1301666 BC Ltd is owned by two individuals who are also directors and officers of Lion CG and, as such, the transaction is a non-arm's length transaction under TSX Venture Exchange rules.
The Butte Valley property has had 17 holes drilled and geophysical studies including heli-MAG and IP have been completed, although a mineral resource has not been established, according to the company.
Lion Copper and Gold is advancing the MacArthur copper project in Nevada, and exploring the Chaco Bear and Ashton properties in British Columbia.
The MacArthur asset sits in Mason Valley, a large, historic copper camp within a land package spanning 51 square miles. The project is a large-scale, low-cost, heap leach operation with potential for near-term production of pure copper cathode.
Contact the author at giles@proactiveinvestors.com