Eastmain Resources Inc. (“Eastmain” or the “Company”), a gold exploration and development company based in Eeyou Istchee James Bay, Quebec, is pleased to announce it has optioned to Benz Mining Corp. (“Benz”), the Ruby Hill East and West properties (the “Property”). The Property is located immediately west of the Eastmain Mine Project, which was optioned to Benz in August 2019 (see press release August 8, 2019).
In conjunction with the option, Eastmain is amending the existing Eastmain Mine Project option agreement in relation to work commitments on the property. The new work schedule accommodates Quebec’s exploration restrictions imposed due to COVID-19 and delays 2020’s $500,000 required spending to 2022.
Blair Schultz, Eastmain Interim President and CEO commented, “This is a great milestone for Eastmain Resources. Monetizing the Ruby Hill Properties and the Eastmain Mine Project allows us to focus on our key James Bay gold assets. Benz has proven themselves as great partners and we’re thrilled to give them the opportunity to develop Eastmain Mine and explore neighbouring Ruby Hill East and West properties.”
“We are extremely excited about the addition of the large Ruby Hill East and West concessions to our flagship Eastmain gold mine project as it adds a considerable exploration component in a highly prospective area to our company,” Miloje Vicentijevic, Benz President and CEO said.
Transaction Terms
Pursuant to the Amending Agreement entered into with Benz, the terms of the original option to acquire up to a 100% interest in the Eastmain Mine Project were amended to remove the Company’s obligation to incur $500,000 in exploration expenditures by October 23, 2020 and add such expenditures to the work requirement for the period ending October 23, 2022.
The Amending Agreement also adds the Ruby Hill West and Ruby Hill East properties (the “Properties”) to the Eastmain Mine Project. Benz can earn a 75% interest in the Properties by satisfying the following acquisition terms:
Cash payments to Eastmain totalling $375,000 as follows:
- $75,000 within three business days of TSX Venture Exchange approval;
- $50,000 on October 23, 2020;
- $50,000 on October 23, 2021;
- $100,000 or 500,000 shares on October 23, 2022; and
- $100,000 or 500,000 shares on October 23, 2023, which can be paid in shares at the election of Eastmain based on the prevailing VWAP of the Company’s shares up to a maximum of 500,000 shares.
- A share payment of 2,000,000 common shares of Benz or a cash payment in an amount to enable Eastmain to acquire 2,000,000 common shares of Benz within three months.
- The issuance of 4,000,000 share purchase warrants, each warrant enabling the holder to purchase one common share of Benz at a price of $0.12 until April 27, 2023.
Benz will have the right to earn an additional 25% interest in the Ruby Hill West and Ruby Hill East properties by paying an additional $100,000 to Eastmain by October 23, 2025, which can be paid in shares at the election of Eastmain based on the prevailing VWAP of the Company’s shares up to a maximum of 500,000 shares.
Following the acquisition of a 100% interest in the Properties, Eastmain will retain a 1% net smelter return royalty, of which one half may be purchased for $500,000 thereby reducing it to a 0.5% net smelter returns royalty. The net smelter returns royalty is also offset by any pre-existing royalties which may reduce the royalty burden.
The overall effect of the Amending Agreement is to modify the existing option agreement to eliminate the requirement to meet a minimum expenditure requirement for 2020 while expanding the property package and facilitating cash payments to Eastmain.