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/NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN
THE UNITED STATES/
TORONTO, Jan. 20, 2014 /CNW/ - Polar Star Mining Corporation (TSX: PSR) (the "Company"), a
Toronto-based company focused on copper and gold exploration in Chile,
announces that it has entered into a joint venture agreement with
Newmont Ventures Limited, a subsidiary of Newmont Mining Corporation
(NYSE:NEM) ("Newmont") to explore, and if appropriate, develop the
Montezuma project located in the Antofagasta and Calama districts of
Chile.
Highlights of the joint venture include:
-
A private placement of CDN $2 million at a price of CDN $0.18 with half
a warrant per common share exercisable over two years at a price of CDN
$0.23
-
A three phase earn-in amounting to USD $20.5 million over a seven year
period
-
The earn-in allows Newmont to own up to a 75% beneficial interest in the
concessions
-
Polar Star has the option to finance and therefore maintain its 25%
beneficial interest through to production
-
By forfeiting an additional 5% beneficial interest, the Company can
elect for Newmont to finance the Company's portion of mine development
cost through to production (the financing option)
-
Newmont may accelerate the various earn-in phases
-
Newmont will act as the manager and operator of the joint venture
Colin Bird, Chief Executive Officer of Polar Star Mining said: "I am
very pleased that Newmont has agreed to enter into a joint venture with
the Company for the exploration and development of Montezuma. The size
and location of Montezuma, relative to major mines and district
geological trends, made the project highly prospective to the major
copper producing companies. The joint venture agreed upon is structured
for the Company to retain a material interest in the project which can
be separately financed or alternatively combine our interest with
Newmont. Thus the Company will have various options available to
maximize shareholder value in the future which the board felt was very
necessary from the outset."
Key agreement details:
Newmont's initial contribution (phase 1 earn-in) is USD $2.5 million
over 30 months from the effective date. No interest in the project will
vest with Newmont until completion of the phase 1 earn-in. After
completion of this expenditure Newmont will have earned a 51%
beneficial interest in the project.
The funding requirements for phase 2 is USD $5.5 million over 30 months,
which will provide Newmont with an additional 14% beneficial interest
in the project, i.e. a total of 65% beneficial interest.
Should Newmont elect to continue to phase 3, it will be required to
spend an additional USD $12.5 million before the expiry of a further 24
months which will earn Newmont a further 10% beneficial interest in the
project. At that stage, Newmont will have a 75% beneficial interest.
Upon Newmont reaching 75% interest, the Company will have options
available to either finance its 25% through to mine production or
alternatively accept a financing option provided by Newmont under terms
provided for in the agreement. The financing option provided by Newmont
allows for an interest at prime plus 4% repayment plan with Newmont
receiving 90% of the Company's cash flow until the loan to the Company
has been repaid.
Should the Company elect not to participate in financing after Newmont
achieves a 75% beneficial interest, the Company may elect to retain a
0.5% net smelter royalty rather than contributing its proportionate
share, with Newmont receiving the Company's 25% interest at no
additional cost.
Upon execution of this Agreement, the joint venture will be governed by
a Management Committee to determine overall policies, objectives,
procedures, methods and actions under the Agreement. The Management
Committee shall consist of two (2) members appointed by Newmont and two
(2) members appointed by the Company. Newmont will have effective
control from commencement of the Agreement.
About Montezuma
Montezuma lies in the Atacama Desert at an elevation of 2,800m in
northern Chile, approximately 15 km south of Calama. The property
extends over 50,000 ha, located within the Domyeko Fault system that
hosts the major copper deposits in Chile.
Geological Setting
Montezuma lies in the Pre-cordillera, parallel and west of the main high
volcanic zone the forms the Andean Cordillera. The oldest rocks are of
Paleozoic age and include gneiss, metadiorites, quartz diorites and
tonalites. The area shows pervasive chlorite-epidote-calcite
alteration. Within these rocks Eocene and early Oligocene porphyritic
intrusions along the north-south striking Domeyko Fault system produced
the major copper porphyry producing mines including Chuquicamata,
Ministro Hales immediately to the north of Montezuma and Mina Escondida
to the south.
About Polar Star Mining Corporation
Polar Star Mining Corporation ("PSR") is a TSX listed exploration and
development company with a focus on building shareholder value in
Chile. The Company's strategy is to advance its large portfolio of
world class projects in Chile through joint ventures.
SOURCE Polar Star Mining Corporation
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