Chesapeake Gold sets out terms of La Calavera deal
2004-12-21 16:39 ET - News Release
Mr. P. Randy Reifel reports
CHESAPEAKE ANNOUNCES EXCHANGE APPROVAL OF LA CALAVERA PROPERTY OPTION
Chesapeake Gold Corp. has set out the terms of its deal to option a 100-per-cent interest in the La Calavera precious metal-copper skarn project in central Oaxaca state, Mexico, as previously reported in Stockwatch on June 29, 2004. The property comprises two mineral concessions, Cerro Calavera and La Zalamera.
Chesapeake may acquire a 100-per-cent interest in the Zalamera concession by paying to the optionor $5,000 (U.S.) in cash upon signing the option agreement (paid), undertaking exploration expenditures on the property totalling $2.65-million by Dec. 20, 2009, completing a feasibility study on the property by Dec. 20, 2012, and by issuing to the optionor a total of 150,000 common shares of Chesapeake over a period of five years as follows:
10,000 common shares to be issued on or before 10 days following Dec. 20, 2004;
15,000 common shares on or before Dec. 20, 2005;
20,000 common shares on or before Dec. 20, 2006;
25,000 common shares on or before Dec. 20, 2007;
30,000 common shares on or before Dec. 20, 2008; and
50,000 common shares on or before Dec. 20, 2009.
Chesapeake may acquire a 100-per-cent interest in the Calavera concession by complying with all of the above obligations necessary to earn a 100-per-cent interest in the Zalamera concession, and by making staged cash payments to the original claim owners of the Calavera concession totalling $490,000 (U.S.) over four years (which includes a final payment of $430,000 (U.S.) to be made by Feb. 24, 2008).
Upon completion of the feasibility study, Chesapeake will also issue additional common shares to the optionor as follows:
50,000 common shares, if the feasibility study states that the recoverable proven and probable gold-silver-copper reserves on the property contain either: (i) not less than one million ounces of recoverable proven and probable gold and silver and gold equivalent and silver equivalent reserves; or (ii) not less than 50 million tons of copper mineralized rocks with sufficient grade to render the recovery of the copper economically viable as a credit in the development and production of a polymetallic mine; and
100,000 common shares, if the feasibility study concludes that: (i) the recoverable proven and probable gold-silver-copper reserves on the property are greater than two million ounces of gold and gold equivalent; and (ii) the property contains not less than 100 million tons of copper mineralized rocks with sufficient grade to render recovery of the copper economically viable as a credit in the development and production of a polymetallic mine.
Any common shares issued pursuant to the exercise of the option to acquire the property will have a hold period of four months commencing from the date of such issuance. Except as disclosed herein, no other securities of Chesapeake will be issued as bonuses, finders' fees or commissions in connection with the acquisition of the property.
The original claim owners of the Calavera concession have retained a 1-per-cent net smelter royalty which Chesapeake may purchase for $2.0-million (U.S.) if Chesapeake has earned a 100-per-cent interest in the property.
Upon earning a 100-per-cent interest in the property, the optionor of the property will be granted a 2-per-cent NSR in respect of the Zalamera concession (of which one-half or 1 per cent may be purchased by Chesapeake for $2.0-million (U.S.)) and a 0.25-per-cent NSR on the Calavera concession.
