Mr. Bruno Hegner reports
DISCOVERY HARBOUR GRANTED OPTION TO ACQUIRE ADDITIONAL 49% INTEREST IN WABASSI JOINT VENTURE, NORTHWEST ONTARIO
Northern Shield Resources Inc. has sold its 49-per-cent interest in Discovery Harbour Resources Corp.'s Wabassi joint venture and its 59-per-cent interest in the joint venture for the neighbouring Max property to Great Lakes Resources LLC, a private U.S. based company, and has granted Great Lakes a first right of refusal to acquire its 100-per-cent interest in the Storm property. As a result of this acquisition by Great Lakes, the interests in the Wabassi JV are held by the company (51 per cent) and Great Lakes (49 per cent) and the interests in the Max JV are held by Great Lakes (59 per cent) and by Rainy Mountain Royalty Corp. (41 per cent).
On completion of this purchase by Great Lakes, the company was granted an option by Great Lakes to acquire a 49-per-cent interest in the Wabassi JV, a 59-per-cent interest in the Max JV and the Storm rights. The option may be exercised by the company paying $2,605,684 plus 8-per-cent accumulated interest thereon, compounded monthly, by June 18, 2015. If the option is exercised by the company, the company will acquire a 49-per-cent interest in the Wabassi JV which would make the company the 100-per-cent owner of the Wabassi property, a 59-per-cent interest in the Max JV and the Storm rights, all subject to the NRN Wabassi royalty (as defined below) and the NRN Max royalty (as defined below).
As part of purchase transaction between Great Lakes and Northern Shield, Great Lakes granted Northern Shield a 0.5-per-cent net smelter returns royalty from the Wabassi property (the NRN Wabassi royalty) and a 0.6-per-cent net smelter returns royalty from the Max property (the NRN Max royalty). Half of each of the NRN Wabassi royalty and NRN Max royalty may be purchased by the royalty payor paying $750,000 to Northern Shield at any time on or before June 18, 2019, or by paying $1.5-million thereafter in respect of each royalty.
In addition, the company, Great Lakes and Northern Shield have agreed with respect to each of the Wabassi JV and the Max JV, that if Great Lakes' participating interest in each of these joint ventures is diluted below 10 per cent before the option is exercised by the company, then: (i) the NRN Wabassi royalty and NRN Max royalty will be terminated, and (ii) the 2.0-per-cent net smelter returns royalty that would otherwise be payable to Great Lakes under the terms of the joint venture agreements for such properties, shall be replaced with: (a) a 1.5-per-cent net smelter returns royalty payable to Great Lakes, which the company shall have the pre-emptive right to reduce from 1.5 per cent to 0.75 per cent by paying Great Lakes $700,000, and (b) a 0.5-per-cent net smelter returns royalty payable to Northern Shield, which the company shall have the pre-emptive right to reduce from 0.5 per cent to 0.25 per cent by paying Northern Shield $300,000. Also, in connection with these transactions, the company has granted Northern Shield a limited non-exclusive licence to use and access the Wabassi camp in consideration for certain rental fees and consumable fees. It is expected that the company will continue as operator of the Wabassi JV.
"Completion of this transaction marks the first step toward the company's strategic goal of consolidating the Wabassi district under a single entity. It is important to remember that Wabassi is not a single project, but a previously undiscovered district. We will now turn our attention to integrating our efforts with those of the province of Ontario, first nations and private companies to develop access and infrastructure to support development of the Ring of Fire mineral province. The Wabassi joint venture holds over 12 kilometres of right-of-way along southern portion of one of the proposed access routes. Improved access is key to lowering our exploration costs and improving the overall development profile of the Wabassi district.," stated Bruno Hegner, president and chief executive officer of the company.
Great Lakes is a private U.S. company controlled by Richard B. Gilliam, a director and significant shareholder of the company. The company's exercise of the option remains subject to approval of the TSX Venture Exchange and, if required, approval of the shareholders of the company.