Under the LOI, and subject to approval of the applicable regulatory authorities, Guangshou is purchasing 4,545,455 units of the Company at $0.22 per unit, with each unit consisting of one common share and one-half of a share purchase warrant, with each full warrant being exercisable to acquire one additional common share of the Company at an exercise price of $0.35 per share for a period of 18 months. Thereafter, subject to finalizing the Definitive Agreement, Guangshou will have the right to earn a 60% interest in the Curipamba project by funding $50 million of development costs to bring the project into commercial production, in accordance with medium scale mining laws of Ecuador, within three years of material development permits. If development costs exceed $50 million, then Guangshou will provide the Company's share of required funding by way of loans, to be repaid with interest, from production profits. The Definitive Agreement will include other standard clauses, for transactions of this nature.
The letter of intent also states that once the Definitive Agreement is finalized, Guangshou will provide additional corporate funding to the Company of up to $1 million per year over the next three years, beginning in 2015, by way of private placement. In addition, Guangshou will, on signing of the Definitive Agreement, reimburse the Company $500,000 for certain land tenure payments and contributions to administrative overhead expenses previously incurred by the Company, and will also reimburse the Company for any project-related expenditures incurred between the date of the LOI and date the Definitive Agreement is finalized.
Mr. Fredy Salazar, CEO of Salazar Resources, stated, "We are pleased to sign this letter of intent, which we feel is in the best interests of our shareholders. The LOI allows us to advance El Domo to commercial production while pursuing new opportunities that will add value to our shareholders."
Mr. Huang Guoqin, Chairman of Guangshou Group Co. Ltd., stated, "We look forward to using our 20+ years of mining experience, including in Ecuador, to work with Salazar to advance the El Domo deposit to commercial production under the medium scale mining provisions of Ecuadorian Mining Law."
