RE: deal with HBMGreat news
Halo Resources options Manitoba property to HudBay
2009-12-22 17:45 ET - News Release
Ms. Lynda Bloom reports
HALO ANNOUNCES OPTION AGREEMENT WITH HUDBAY
Halo Resources Ltd. had signed an option agreement with Hudson Bay Mining and Smelting Co. Ltd., a subsidiary of HudBay Minerals Inc. The agreement allows HudBay to earn up to a 67.5-per-cent joint-venture interest in a 1.1-square-kilometre area of the 200-square-kilometre Sherridon VMS district in Manitoba that hosts the cold and lost mineralization.
"This agreement with HudBay is an important milestone in the advancement of the Sherridon VMS district, located 110 kilometres by road from Flin Flon," says Lynda Bloom, Halo's president and chief executive officer. "If the next phase of exploration is successful, the joint venture would anticipate fast-tracking development and production to provide feed to HudBay's Flin Flon mill. In addition, Halo's successful team will continue exploring for additional copper-zinc deposits and working to add to the company's known mineral resources."
In order to exercise the option to earn a 51% interest, HudBay must:
- Make aggregate cash payments to Halo of $800,000:
- On executing the agreement $250,000;
- On or before Dec. 21, 2010, $150,000;
- On or before Dec. 21, 2011 $400,000.
- Complete minimum expenditures of $1.35 million:
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- On or before Dec. 21, 2010, $350,000;
- On or before Dec. 21, 2011, $1-million.
HudBay has the right to accelerate expenditures and option payments as well as the right to terminate the agreement with 90-day written notice.
Upon earning a 51-per-cent interest, Halo and HudBay will form a joint venture, with HudBay as the operator. HudBay can increase its 51-per-cent joint-venture interest to 60 per cent by financing and completing a feasibility study within four years and paying $2-million in cash to Halo. HudBay can further increase its interest to 67.5 per cent by paying $2.5-million to Halo prior to commencement of commercial production.
If a production decision is made, HudBay will finance Halo's proportionate share of the development costs and will be repaid from Halo's proportionate share of revenues. HudBay will purchase all ore produced by the joint venture on an arm's-length basis.
Halo has the right to reacquire HudBay's interest by partially reimbursing HudBay's total expenditures, or granting to HudBay a 1-per-cent net-smelter-return royalty, if the feasibility study and application for permitting are not completed by Dec. 21, 2013.
The property is subject to a 0.5-per-cent net smelter return payable to W. Bruce Dunlop Limited NPL, to a maximum of $2.5-million from the production of minerals.
We seek Safe Harbor.