Margaret Lake DiamondsMargaret Lake signs option to acquire Morrison 2020-08-06 15:03 ET - News Release Mr. Jared Lazerson reports MARGARET LAKE DIAMONDS ANNOUNCES OPTION OF MORRISON COPPER-GOLD PROJECT LOCATED IN OMINECA REGION OF BRITISH COLUMBIA Margaret Lake Diamonds Inc. has entered into an option agreement dated Aug. 1, 2020, to acquire a 100-per-cent right, title and interest, free of all encumbrances, in the Morrison copper-gold deposit (Minfile 093M007) located 65 kilometres northeast of Smithers, B.C. In order exercise its option to acquire an undivided 80-per-cent right, title and interest in and to the project, subject to a net smelter returns royalty described herein, the company has agreed to pay cash consideration and issue share consideration to 1240089 B.C. Ltd. and 1258713 B.C. Ltd. (the vendors), and incur exploration expenditures on the oroject on the following basis: Cash payments totalling $12.15-million under the following schedule: $150,000 upon execution of the agreement; $2-million upon receipt of TSX Venture Exchange acceptance to the agreement; $4-million prior to Aug. 1, 2021; $3-million prior to Aug. 1, 2022; $3-million prior to Aug. 1, 2023. The company has further agreed to issue, subject to TSX-V acceptance, 19 million common shares of the company to the vendors for the 80-per-cent interest. For greater clarity, 9.5 million shares will be issued to each of 1240089 B.C, and 1258713 B.C. under the following schedule: Four million common shares upon receipt of TSX-V acceptance of the agreement; Five million common shares prior to Aug. 1, 2021; Five million common shares prior to Aug. 1, 2022; Five million common shares prior to Aug. 1, 2023. For greater clarity, the purchase price shall be payable in equal portions to each of the vendors. The vendors do not intend to act in concert in respect of forming a control person of the company and the transaction is an arm's-length transaction as defined in the policies of the TSX-V. Exploration expenditures On or before July 1, 2023, the company shall expend an aggregate amount of $1.05-million of expenditures (as defined in the agreement) in respect of the project as follows: $50,000 shall be expended by the company prior to Aug. 1, 2021; $500,000 shall be expended by the company prior to Aug. 1, 2022; $500,000 shall be expended by the company prior to Aug. 1, 2023. Carried interest In the event the company pays the vendors the purchase price and completes the exploration expenditure requirements, it will have acquired the 80-per-cent interest, leaving the vendors with an undivided 20-per-cent carried interest in the project. Under the terms of the agreement, the company may acquire the carried interest from the vendors for a one-time cash payment of $4-million, therefore bringing the total interest in the project after payment of the purchase price, incurring exploration expenditures of not less than $1.05-million and acquisition of the 20-per-cent carried interest to a 100-per-cent ownership of the project. Net smelter return The company has agreed to a NSR of 2.5 per cent to the vendors of which 1.5 per cent of the NSR may be bought back from the vendors for $5-million, leaving the vendor with a 1-per-cent NSR. The company advises that the vendors have represented that they own a 100-per-cent right, title and interest in and to the project, free and clear of all encumbrances, but are aware that the previous owner has requested that the gold commissioner of B.C. reinstates their previous mining lease covering the project. The agreement is subject to the acceptance of the TSX-V and all securities issued under same shall be subject to resale restrictions of not less than four months and one day from their date of issue. We seek Safe Harbor.