- Puma Exploration (TSXV:PUMA) has signed an C$16.5 million option agreement with KG Exploration, a wholly owned subsidiary of Kinross Gold (TSX:K), tied to its Williams Brook gold project in New Brunswick
- Kinross will also pick up C$1.01 million in Puma shares, granting it a 9.9 per cent stake in the junior miner
- Puma Exploration is a mineral exploration company developing precious metals projects in New Brunswick near Canada’s famous Bathurst Mining Camp
- Puma Exploration stock shot up by 50 per cent on the news, last trading at C$0.09 per share
Puma Exploration (TSXV:PUMA) has signed an option agreement with KG Exploration, a wholly owned subsidiary of Kinross Gold (TSX:K), tied to its highly prospective Williams Brook gold project in New Brunswick.
Kinross will complement the option with a C$1.01 million private placement representing 9.9 per cent of the junior miner, with an agreement in place to potentially increase its skin in the game to 19.9 per cent.
Option agreement
Kinross will have the right to earn a 65 per cent interest in the project by funding a minimum of C$16.75 million in exploration expenditures over five years, including C$2 million with at least 5,000 metres of drilling during the first 18 months.
Puma will act as operator at Williams Brook with assistance from a technical committee comprosed of two representatives from each company. As operator, Puma will receive annual management fees that will go directly into its treasury, including:
- 10 per cent of annual expenditures until C$1 million has been incurred.
- 5 per cent of annual expenditures in excess of C$1 million.
According to Thursday’s news release, “the option agreement confirms Kinross’ trust in Puma’s expertise and skill in driving exploration forward.”
Should Kinross exercise its option with Puma, the companies will form a joint 65-35 venture, under which they will have to contribute in accordance with their respective stakes.
Private placement
Kinross will also subscribe to a C$1.01 million private placement for treasury common shares of Puma, granting it a 9.9 per cent stake in the junior mining stock. Puma will use the funds to explore the remainder of its portfolio.
The transaction is tied to a rights agreement that allows Kinross to participate in future equity financings to maintain its ownership or increase it to 19.9 per cent.
Puma intends to update the market on its short to medium-term strategy for its other 100-per-cent-owned properties over the coming weeks.
Leadership insights
“We believe in the region’s potential to host Canada’s next major gold camp,” Marcel Robillard, Puma’s president and chief executive officer, said in a statement. “I am delighted to welcome Kinross, the first major gold producer to establish a presence in New Brunswick. I look forward to working with its first-in-class exploration and development team to grow the region’s potential. Most of the first C$2 million will be directed towards drilling (5,000 m) and other identified targets on the Williams Brook property. The drilling program will continue to test and define the Lynx gold zone previously intersected by Puma (5.55 grams per ton (g/t) gold over 50.15 m, 2.49 g/t gold over 63.05 m, 5.15 g/t gold over 23.15 m, 2.77 g/t gold over 42.80 m, 1.24 g/t gold over 98.05 m, 3.97 g/t gold over 22.10 m, 3.12 g/t gold over 35.35 m).”
“Within four years and with only C$12.75 million of expenditures (as of May 31, 2024), Puma successfully defined a high-grade gold zone at the Williams Brook property, the Lynx gold zone that attracted a Tier-one gold producer,” added Robillard. “With juniors still struggling despite gold’s all-time high price, this significant injection of cash over the next five years, especially Kinross’ firm commitment over the next 18 months, will significantly accelerate exploration and unlock the project’s value. Kinross’ commitment represents a stamp of approval on Williams Brook’s potential, and having Puma as the operator speaks to Kinross’ confidence in the strength of our exploration team.”
About Puma Exploration
Puma Exploration is a mineral exploration company developing precious metals projects in New Brunswick near Canada’s famous Bathurst Mining Camp.
Puma Exploration stock (TSXV:PUMA) shot up by 50 per cent on the news, last trading at C$0.09 per share. The stock has given back 25 per cent year-over-year and 40 per cent since 2019.
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(Top photo of quartz vein sulphides from the Lynx gold zone on Puma Exploration’s Williams Brook gold project: Puma Exploration)