Otis Gold Corporation OGLDF

Otis Gold options 100% of Oakley to Lateral Gold

[bcjt]

 

 

Otis Gold options 100% of Oakley to Lateral Gold

2013-01-10 08:36 ET - News Release

 

Mr. Craig Lindsay reports

OTIS ANNOUNCES OAKLEY PROJECT JOINT VENTURE

Otis Gold Corp. has signed a letter of intent to joint venture its Oakley project with Lateral Gold Corp. Oakley is a high-potential, classic epithermal hot-spring-type gold project that is host to an existing National Instrument 43-101-compliant inferred resource of 235,000 ounces gold at a grade of 0.55 gram per tonne. The agreement allows Lateral to earn up to an initial 70-per-cent interest in Oakley in exchange for a combination of cash, property expenditures and Lateral shares as follows:

Lateral shall pay a total of $915,000 to Otis according to the following schedule:

 

• $15,000 upon execution of this agreement (paid);
  • $35,000 as of the date Lateral receives the acceptance of the TSX Venture Exchange to the option;
    • $115,000 on or before the first anniversary of the acceptance date;
      • $250,000 on or before the second anniversary of the acceptance date;
        • $250,000 on or before the third anniversary of the acceptance date;
          • $250,000 on or before the fourth anniversary of the acceptance date.

           

          Additionally, Lateral shall incur a total of $5.7-million of work expenditures on the project subject to the following minimum obligations:

           

          • A minimum of $300,000 shall be incurred within 12 months following the acceptance date with at least 50 per cent to be spent directly on drilling;
            • A further minimum of $700,000 shall be incurred within 24 months following the acceptance date;
              • A further minimum of $1.3-million shall be incurred within 36 months following the acceptance date;
                • A further minimum of $1.5-million shall be incurred within 48 months of the acceptance date;
                  • A further minimum of $1.9-million shall be incurred within 60 months of the acceptance date.

                   

                  Finally, Lateral shall issue to Otis a total of 4.95 million common shares in the capital of Lateral according to the following schedule:

                   

                  • 200,000 shares on the acceptance date;
                    • A further 250,000 shares on or before the first anniversary of the acceptance date;
                      • A further 500,000 shares on or before the second anniversary of the acceptance date;
                        • A further 1.5 million shares on or before the third anniversary of the acceptance date;
                          • A further 2.5 million shares on or before the fourth anniversary of the acceptance date.

                           

                          The agreement also requires that Lateral shall provide NI 43-101-compliant resource estimates on or before both the third and fourth anniversary dates, and a preliminary economic assessment by the fifth anniversary date, at which time the 70-per-cent interest will have been earned.

                          Upon Lateral earning into a 70-per-cent interest, the agreement provides Lateral with an additional option to earn a further 10 per cent in exchange for $1.5-million in cash (with $500,000 to be paid within 90 days of earning its 70-per-cent interest and a further $1-million to be paid within 24 months of earnings its 70-per-cent interest) and two million Lateral common shares (with 500,000 shares to be issued within 90 days of earning its 70-per-cent interest and a further 1.5 million shares to be issued within 24 months of earning its 70-per-cent interest). Upon earning an 80-per-cent interest, Lateral has the right to earn a final 20 per cent, for a total interest of 100 per cent, in exchange for the issuance of an additional five million Lateral common shares and a cash payment based on a multiple of any NI 43-101 inferred gold ounces contained in an NI 43-101 report to be filed with the exchange in conjunction with its approval of this agreement, with both to made within six months of achieving the 80-per-cent interest. Additionally, a net-smelter-returns royalty of 2.5 per cent will be issued in favour of Otis in connection with any lands subject to this agreement that are not already encumbered by royalty agreements.

                          Otis president and chief executive officer Craig Lindsay stated: "We are very excited to have Lateral Gold as a partner to assist us in moving the Oakley project forward. Otis stands to be rewarded in the form of both cash and a significant potential shareholding in Lateral should the Oakley project achieve the development targets that we envision for it."

                          Otis has an existing 70-per-cent interest in Oakley, which is being increased to 100 per cent through a separate transaction with its joint-venture partners, the closing of which is a condition precedent of this agreement. As precedent for closing a definitive agreement by Feb. 15, 2013, both the company and Lateral will negotiate in good faith the final terms of a definitive agreement, which is subject to several terms and conditions, including acceptance by the TSX Venture Exchange.