Stronghold Announces Amendment to the Eagle Mountain Agreement That Will Allow Stronghold to Earn an Immediate 50% Interest i...
16 Enero 2012 - 7:00AM
Marketwired Canada
STRONGHOLD METALS INC. ("Stronghold" or the "Company") (TSX
VENTURE:Z)(OTCQX:SDMTF)(FRANKFURT:E9X) is pleased to announce that it has
entered into an Amended and Restated Earn-In and Joint Venture Agreement (the
"Amendment Agreement") with Omai Gold Mines Ltd. ("OGML") and Eagle Mountain
Gold Inc. ("EMGI"), affiliates of IAMGOLD Corporation ("IAMGOLD") with respect
to the Eagle Mountain Gold Property (the "Property") in Guyana. The Amendment
Agreement makes several major changes to the terms of the existing agreement
(the "Original Agreement") pursuant to which the Company was granted the right
to acquire up to 100% of the issued and outstanding shares of EMGI. EMGI owns
the Eagle Mountain Gold Property. EMGI is owned by OGML, a 95% owned subsidiary
of IAMGOLD. The Republic of Guyana ("Guyana") holds the remaining 5% of OGML.
Highlights:
-- On closing (expected this month) Stronghold will acquire 50% of the
issued and outstanding shares of EMGI and effectively an indirect 50%
interest in the Property. Stronghold and OGML will become joint venture
partners, with Stronghold continuing to act as Operator.
-- On closing, IAMGOLD indirectly through OGML (subject to Guyana's 5%
interest) will own approximately 15.8% of Stronghold's issued and
outstanding shares and become its largest shareholder.
-- Stronghold will have no further cash payments due to OGML in 2012.
-- To date Stronghold has paid OGML US$600,000, issued OGML 4,000,000
shares and incurred approximately US$3,500,000 in exploration
expenditures ("Expenditures") on the Property. Stronghold incurred more
than twice the required Expenditures under the Original Agreement, which
in part has lead to the restructuring of the Amendment Agreement.
-- Stronghold has a clear path to acquiring 100% of EMGI.
Under the terms of the Original Agreement in addition to the cash and share
payments made to date, Stronghold was required to:
-- Pay OGML US$900,000 by February 28, 2012;
-- Pay OGML an additional US$1.0 million; spend US$3.5 million in qualified
Expenditures on the Property and issue OGML 2 million common shares of
Stronghold by October 31, 2012, in order to earn a 50% interest in EMGI;
and
-- Pay OGML an additional US$1.0 million to increase the ownership to 100%.
Stronghold, OGML and EMGI have agreed, subject to the ratification of the boards
of directors of OGML and EMGI, to amend the Original Agreement taking into
account the fact that Stronghold accelerated the exploration program on the
Property and has already exceeded the total Expenditure requirement of US$3.5
million to achieve a 50% interest in EMGI.
New Agreement Terms
Under the terms of the Amendment Agreement, OGML agrees to immediately transfer
a 50% interest in EMGI to Stronghold in consideration of the issuance of
7,500,000 shares of Stronghold. The changes reduce the cash obligation required
under the Original Agreement and acknowledge the progress the Company has made
on the Property with the US$3.5 million expenditure during 2011.
Stronghold has the right to acquire the remaining 50% interest in EMGI on or
before April 30, 2013 by paying OGML an additional US$1,000,000 in cash or
shares, at the Company's discretion. The number of shares will be determined
based on a per share price equal to a five percent (5%) discount to the volume
weighted average price ("VWAP") of Stronghold's shares for the 20 trading days
before the date Stronghold notifies OGML of its intention to issue such shares,
provided such share issuance does not result in OGML controlling in excess of
19.99% of Stronghold's issued and outstanding shares. Between October 31, 2012
and January 31, 2013, OGML can require Stronghold to acquire the remaining 50%
interest in the Property under the same terms and conditions.
The following chart shows the consideration paid and payable in order for
Stronghold to acquire up to a 100% interest in EGMI and therefore sole ownership
of the Eagle Mountain Property (excluding any equity interest which may be held
by the Government of Guyana):
Table 1: Summary of earn-in and JV terms (all money figures in US$ Dollars)
----------------------------------------------------------------------------
Issuing of
Stronghold Vesting
Significant Cash Common Interest
Milestone Exploration Payments Shares for Nature of
Date Expenditures to OGML to OGML Stronghold Commitment
----------------------------------------------------------------------------
Completed To Date $3,500,000 $600,000 4,000,000 0% Firm
(January 2011) (completed)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SUBTOTAL to Date $3,500,000 $600,000 4,000,000 0% Firm
(completed)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
By February 29, 7,500,000 50% Firm
2012 shares
----------------------------------------------------------------------------
SUBTOTAL By $3,500,000 $600,000 11,500,000 50% Firm
February 29, 2012 shares
----------------------------------------------------------------------------
----------------------------------------------------------------------------
By April 30, 2013 $1,000,000 100% Optional
(1)
----------------------------------------------------------------------------
SUBTOTAL By April $1,000,000 100% Optional
30, 2013 (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
GRAND TOTAL 11,500,000
$3,500,000 $1,600,000 shares 100%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. Stronghold has the option to issue shares to OGML in lieu of this cash
payment provided such share issuance does not result in OGML controlling
in excess of 19.99% of Stronghold's issued and outstanding shares.
Upon the grant of a mining or exploitation licence by the Government of Guyana
for the development of the Property, Stronghold will pay OGML an additional
US$3,500,000. Stronghold may, at its sole option, elect to issue shares to OGML
having a deemed value of US$3,500,000, such value to be based on a per share
price equal to a five percent (5%) discount to the VWAP of Stronghold's shares
for the 20 trading days before the date Stronghold notifies OGML of its
intention to issue such shares, provided such share issuance does not result in
OGML controlling in excess of 19.99% of Stronghold's issued and outstanding
shares.
Finally, after the commencement of commercial production of gold from the
Property, Stronghold shall pay US$5,000,000 cash to OGML.
The following chart shows Stronghold's obligations following the grant of a
mining or exploitation licence for Eagle Mountain:
Table 2: Summary of earn-in and JV terms (all money figures in US$ Dollars)
---------------------------------------------------------------------------
On Granting of a Mining License $ 3,500,000(2)
---------------------------------------------------------------------------
Within 180 days from Commencement of Commercial Production $ 5,000,000
---------------------------------------------------------------------------
2. Stronghold has the option to issue shares to OGML in lieu of this cash
payment provided such share issuance does not result in OGML controlling
in excess of 19.99% of Stronghold's issued and outstanding shares.
The Amendment Agreement is subject to the approval of the TSX Venture Exchange.
Yannis Tsitos, President and CEO of Stronghold, stated: "This renegotiation of
the terms of our Earn-In and Joint Venture Agreement represents a very
significant milestone for Stronghold. During 2011 we conducted an aggressive
drilling campaign on Eagle Mountain, and to date have received the results from
46 of the 78 holes we completed. Of those 46 holes, 44 intersected gold
mineralization of meaningful widths and grades and the resource continues to be
open on three sides. We have a very good relationship with IAMGOLD and they were
clearly pleased with the progress we have made at Eagle Mountain. Our Amended
Agreement with OGML and EMGI allows the Company to focus its resources on
progressing the project and represents a rare opportunity to rapidly move an
already advanced project into the Pre-Feasibility Study/ Scoping Study stage
delivering tangible value to our shareholders. We expect to receive the
remaining results from the completed holes shortly and then incorporate the
results into delivering a new NI 43-101 compliant resource. We plan to intensify
pace of the exploration work program to expand and advance the current resource
estimate. Having IAMGOLD indirectly, through OGML (subject to Guyana's 5%
interest), increase their share position will be of tremendous benefit to the
Company as we move forward with our plans. Stronghold is focused on bringing
Eagle Mountain into production, which will not only be valuable to the Company's
shareholders, but can also make an important contribution to the development of
Guyana and the well being of the Guyanese people."
Paul Olmsted, Senior Vice President, Corporate Development, IAMGOLD Corporation,
stated: "We are pleased with the work Stronghold has done to date on the Eagle
Mountain project and look forward to continued success both on the project and
on our increased share position in Stronghold."
For further information on the Eagle Mountain Property and on Stronghold, please
refer to the Company's corporate presentation and news releases on its website
at www.strongholdmetals.com.
On behalf of The Board of Directors of Stronghold Metals Inc.
Ioannis (Yannis) Tsitos, President, CEO & Director
Statements contained in this news release may constitute forward-looking
statements. Such forward-looking statements are based upon the Company's
reasonable expectations and business plan at the date hereof and are subject to
change depending on economic, political and competitive circumstances and
contingencies. Readers are cautioned that such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
a change in such assumptions and the actual outcomes and estimates may be
materially different from those estimated or anticipated future results,
achievements or positions expressed or implied by those forward-looking
statements. The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise.
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