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Creso Exploration Inc. (“Creso” or the “Corporation”) (TSX VENTURE:CXT)(OTCQX:CRXEF)(FRANKFURT:C3X) is pleased to announce that Hunter Dickinson Resources Ltd. (“Hunter Dickinson”), a subsidiary of Hunter Dickinson Inc., has signed an agreement to acquire up to a 69.95% interest in a portion of the Company’s Shining Tree property position (the “Project”) in NE Ontario. A binding letter agreement (“Letter Agreement”) has been executed and is subject to, among other things, completion of due diligence (“Due Diligence”) within 60 days.
Pursuant to the terms and conditions of the Letter Agreement, Hunter Dickinson, or its nominated affiliate, can acquire up to a 69.95% interest in a limited partnership to which Creso will transfer its interests in certain claims. The joint area of these claims totals approximately 17% of the 284 km² in which Creso has property interests in and around the Shining Tree district. In order to acquire its 69.95% interest, Hunter Dickinson’s obligations will include:
Private Placements:
The initial $500,000 private placement will be made on the effective date of the definitive agreement (the “Effective Date”), with the three additional private placements to be executed on the first, second, and third anniversaries of the Effective Date. The initial private placement will consist of 1 million units at a subscription price of $0.50 each, with each unit consisting of one common Creso share and one full warrant entitling the holder to subscribe within two years for one common Creso share at $0.65.
The three additional private placements of $500,000 each will bring the total subscription consideration to $2 million, with each subscription unit to consist of one common Creso share and one-half of a warrant. The subscription price of each unit will equal the volume-weighted average closing market price of Creso common shares on the TSX-V over the 20 trading days immediately preceding the date of issuance of each unit, with each full warrant entitling the holder to subscribe within two years for one common share in Creso at a subscription price at a 30% premium to the corresponding unit price.
Exploration Expenditures:
In addition to the private placement funds of $2 million, Hunter Dickinson is required to incur $16 million in exploration and development expenditures by the Third Anniversary of the Effective Date (the “Investment Date”) to retain a 50.95% interest in the Project. Once this initial ownership interest is retained, Hunter Dickinson will have an option to earn an additional 9% ownership interest for a total 59.95% interest within two years of the Investment Date (the “First Option Date”) by incurring exploration expenditures to a combined sum of at least $10 million; or delivering a pre-feasibility study (as defined in NI 43-101) relating to the Project. On earning the First Option, Hunter Dickinson will have a Second Option to earn an additional 10% ownership interest, for a total 69.95% interest, by incurring exploration expenditures of at least $15 million within two years of the First Option Date; or delivering a feasibility study (as defined by NI 43-101) relating to the Project. At this point, Creso will retain a 29.95% interest in the Project and the general partner of the limited partnership, will hold the remaining 0.1% interest.
Hunter Dickinson will be the operator of the Project as long as they continue their involvement, and all exploration and development decisions will be done by a Management Committee made-up of three representatives of Hunter Dickinson and two representatives of Creso. If a Partner’s interest is to be diluted, it will be done so on a straight-line basis. If Hunter Dickinson fails to complete the minimum expenditure or payment requirements at the initial stage of its earn-in, then it will forfeit all interests in the Project. If Hunter Dickinson fails to complete the requirements to exercise each option, then it will not acquire the additional interest that would have been acquired if it had exercised that option. If either partner drops below a 10% working interest, then that interest will be converted to a 5% net profits interest royalty.
The Project consists of claims in which Creso has property interests that include the Minto, Tyranite, Duggan, Matona, Porphyry Lake, Indian Lake, and other surrounding claims.
Pierre Gauthier, Chairman of Creso commented, “We are looking forward to working with Hunter Dickinson’s very capable group to establish economic viability on one or more properties on Creso’s holdings. The Creso team is extremely happy to see its work come to fruition with a more assured development plan for the future through this Option Agreement.”
The transactions disclosed in this news release are subject to regulatory approval.
This Press Release has been reviewed and approved by Mr. Alex Kutah, M. Sc, P. Geo., a Qualified Person under National Instrument 43-101.
Read the full news release here. Image from Creso’s Minto operations, part of the Shining Tree mineral claim group.
