Calico Resources (TSX-V:CKB, StockForum), a Vancouver-based mineral exploration company operating in the Calico Mountains located in northwestern Nevada, announced today that that company had entered into a Memorandum of Agreement (MOA) with privately owned Rockstar Resources based in Nevada.
The deal requires that Rockstar Resources pay $30.0 million in cash and remit a 1% net smelter returns royalty to Calico.
The transaction will be facilitated by way of Rockstar acquiring Calico's US subsidiary Calico Resources USA.
Since Seabridge Gold also has an operating interest in Grassy Mountain, it is obligated to discharge its 10% net profits interest royalty and put option that the company currently has against the project.
Rockstar has agreed to pay Seabridge US$5.0 million with Calico supplying the remaining US$2.5 million, resulting in a US$7.5 million payout for Seabridge at the close of the sale. Seabridge has agreed conditionally to the discharge.
According to the news release, “Under the Agreement, Calico must obtain the Shareholder Approval by February 28, 2014. Failure to do so would cause the Initial Down Payment and the Subsequent Down Payment to be refundable to Rockstar.”
It detailed further, “If Calico obtains Shareholder Approval by February 28, 2014 and Rockstar has failed to raise its closing funds by that date and Rockstar has not elected to extend the Closing Date to March 31, 2014, then the Initial Down Payment and the Subsequent Down Payment will be retained by Calico.”
Calico president and CEO, Buck Morrow, commented, “The sale of the Grassy Mountain Project will provide our company with sufficient funds to grow the business during these difficult times in the market.”
Morrow continued, “The retention of a Net Smelter Return royalty will provide Calico with an opportunity to enjoy the upside potential of the project in the future as well.”
Then summed up, “I believe this is a good outcome for the shareholders going forward and anticipate shareholder approval.”
Calico Resources was in the news recently when the company withdrew application to re-price warrants.
Shares rose 70.83% on the news to $0.205 per share.
Currently there are 51,695,369 outstanding shares with a market cap of $10.6 million.