Huge News for ARB.H - Ardonblue to explore Golden Triangle
Ardonblue to option Empire, Midas from J2 members
2017-03-15 17:21 PT - News Release
Mr. Clive Brookes reports
ARDONBLUE OPTIONS TWO PROJECTS
Ardonblue Ventures Inc. has entered into two separate letter agreements with J2 Syndicate Holdings Ltd. (the syndicate) and its members (the optionors) providing the company with the option to acquire, subject to a net smelter return royalty, a 100-per-cent interest in a mineral project consisting of 9,739.94 hectares or 299 units situated in the Omineca mining district (the Empire project) and an option to acquire, subject to a net smelter return royalty, a 100-per-cent interest in a mineral project consisting of 13,445.09 hectares or 412 units situated in the Skeena mining district (the Midas project). The letter agreements are to be superseded by definitive agreements in due course.
To keep each of the options in good standing, the company is required to make initial payments of $300,000 on each property and annual cash payments totalling $3.4-million for each option over a 10-year period, of which the first payment of $300,000 is obligatory, the second-year payment of $300,000 due on May 1, 2018, is optional, and each subsequent annual payment of $500,000 due on May 1 of each year is optional and will be credited as advance royalty payments. On the effective date, the company is also required to issue 8.2 million units for each of the options to the optionors at a deemed price of six cents per unit, each unit being composed of one share plus one share purchase warrant entitling the holder to purchase one share of the company for eight cents for a period of five years. All warrants will be subject to provisions prohibiting exercise if, as a result, the holder would hold 10 per cent or more of Ardonblue's outstanding shares postexercise. In addition, the warrants will be held in escrow by the solicitors for Ardonblue and will be released rateably in tranches as, when and if the exercise of the warrants released from escrow, together with all shares issued to the optionors on the effective date and then owned by the optionors, would not result in the optionors, as a group, holding more than 49.9 per cent of the outstanding shares of Ardonblue. To keep each of the options in good standing, the company is also required to issue 4.1 million shares to the optionors at the beginning of May in each of the second, third and seventh years. The company is required to make exploration expenditures of $350,000 on the Midas project and $450,000 on the Empire project in the first year and to keep each of the options in good standing thereafter, and is required to make subsequent annual expenditures of $500,000, $1-million, $1.5-million, $2-million, $3-million and $5-million with the requirement in year eight to elect by May 1, 2024, to produce a feasibility report by May 1, 2027. The requirement to produce each of the feasibility reports by May 1, 2027, is subject to the company obtaining in each case: (a) an extension to Dec. 15, 2027, by paying the optionors $1 (U.S.) for every additional equivalent ounce of gold in excess of two million equivalent ounces of gold established in accordance with National Instrument 43-101 resource reports produced prior to the feasibility report, or (b) by making, until it does produce a feasibility report, annual payments (each one year period being an extension term) to the optionors of: (i) $1-million (U.S.) in each of the first five extension terms; (ii) $2-million (U.S.) in each of the sixth through the 10th extension terms; and (iii) $3-million (U.S.) in each succeeding extension term. If the company elects to produce a feasibility report, such election becomes an obligation to produce it by May 1, 2027, failing which, subject to obtaining an extension, the company will be required to pay $1-million to the optionors as liquidated damages for failure to produce a feasibility report.
In addition to the cash, units and exploration expenditure commitments required, the company is also required, on the effective date (being the date which is three days after the TSX Venture Exchange accepts the definitive agreements for filing or otherwise consents to the completion of the options) to pay the aggregate of $500,000 to acquire a 20-per-cent interest in a new exploration syndicate to be known as the J2B syndicate.
Pursuant to each of the options, the company is required to pay the optionors a resource bonus of $1-million (U.S.) and 10 million shares as and when NI 43-101 mineral reserves and mineral resources collectively meet two million equivalent ounces of gold on the respective properties, and thereafter the company is required to pay $1 (U.S.) per additional equivalent ounce of gold based on subsequent resource reports.
A 3-per-cent royalty on net smelter returns from all production from each property acquired by Ardonblue will be payable in cash or in kind at the option of the optionors, with a right of Ardonblue until May 1, 2021, to buy down the royalty by 1 per cent to 2 per cent for the payment to the optionors of $2-million (U.S.). If the price of gold increases to $2,000 (U.S.) per ounce, the royalty will increase to 4 per cent if it has not previously been bought down to 2 per cent, and it will increase to 3 per cent if it has previously been bought down. If the royalty is at 4 per cent, Ardonblue may reduce it to 2 per cent by the payment of $4-million (U.S.) to the optionors by the date which is the later of the seventh anniversary of the definitive agreement or six months after the price of gold reaches the $2,000 (U.S.) threshold. If the royalty is at 4 per cent, Ardonblue may reduce it to 3 per cent by the payment of $2.5-million (U.S.) to the optionors by the date which is the later of the seventh anniversary of the definitive agreement or six months after the price of gold reaches the $2,000 (U.S.) threshold.
Ardonblue must have a minimum of $2.4-million cash on deposit by April 30, 2017, net of all liabilities, as a condition precedent to the grant of the options and must write off $95,391,00 in debt and also settle up to $330,000 of debt at six cents per share by the issuance of up to 5.5 million shares.
Closing of the proposed transactions is subject to TSX Venture Exchange acceptance of a filing required to be made in respect of the options, the shares for debt, and all other necessary regulatory approvals and acceptances, as well as the other conditions precedent.
We seek Safe Harbor.