Explor Resources Inc New EXSFF

Teck - TPW Agreement

[Wolfin13]

Agreement with Teck Resources Limited for the Timmins Porcupine West Property (TPW)

On December 19, 2014, the Corporation signed an option agreement with Teck Resources Limited (“Teck”) for the TPW property whereby Teck could earn up to a 70% interest in the property.

Explor grants to Teck the option to acquire an initial 55% interest in the TPW property (the “First Option”) which Teck may exercise by incurring an aggregate of $8,000,000 in committed and optional expenditures by May 1st, 2019, of which is a total amount of $1,500,000 on or before May 1st, 2016; a cumulative total amount of $3,000,000 on or before May 1st, 2017; a cumulative total amount of $5,000,000 on or before May 1st, 2018 and a cumulative total amount of $8,000,000 on or before May 1st, 2019. If Teck does not incur the listed expenditures by their due date, Teck may pay cash in lieu of the shortfall to maintain the First Option. Teck may terminate the First Option at any time prior to exercising the First Option. 

Teck will have a supplementary option (the “Second Option”) to earn an additional 15% interest in the TPW property by incurring an additional $4,000,000 in expenditures, for an aggregate amount of $12,000,000 on or before May 1st, 2022, of which is an additional amount of $1,000,000 on or before May 1st, 2020; a cumulative amount of $2,250,000 on or before May 1st, 2021 and a cumulative amount of $4,000,000 on or before May 1st, 2022. If Teck does not incur the listed expenditures by their due date, it may pay cash in lieu of the shortfall to maintain the Second Option. If Teck exercises the Second Option, Teck will own a 70% interest in the property and Explor will own a 30% interest.

If Teck exercises the First Option, the parties shall participate in exploration and development of the TPW property through a joint venture, which shall be formed on the date the Second Option is exercised or expires if it not exercised. Thereafter, each party shall fund its prorata share of future expenditures on the property or incur dilution via a standard industry formula. If a party’s interest in the property is diluted below 10%, its interest will be converted to a 5% net profits royalty. Upon formation of the joint venture, Teck will be the operator as long as it holds the largest interest.

During the year ended April 30, 2015, according to this agreement, Teck purchased 3,500,000 units at $0.09 each for an amount of $315,000. Each unit consists of a common share and one-half warrant. Every whole warrant allows to acquire one common share at a price of $0.10 over a 12 months period and at a price of $0.15 over an additional period of 12 months.