THUNDER BAY – Mining – Noront Resources Ltd. has announced an agreement has been signed between the Company and Eagle Hill Exploration Corp. to amend certain provisions of the option agreement entered into between the parties on July 20, 2009 in regards to the Windfall Lake Property.
Paul Parisotto, Interim President and CEO stated: “The Windfall Lake Property is a non-core asset of the Company and this Amending Agreement provides Eagle Hill with more time to carry out work to further advance the Project and allows Noront to maximize the value of its interest. Noront is committed to advancing its Eagle’s Nest Project and any proceeds from a possible sale of its interest in the Project will be used to further develop Eagle’s Nest.”
Noront Resources Agreement
In accordance with the Option Agreement, EAG earned a 75% interest in the Project and the Company retains a 25% interest subject to the provisions of the Option Agreement. Upon earning its 75% interest under the Option Agreement, EAG was required to deliver either a bankable feasibility study (providing for a minimum internal rate of return of 15%) or commit to cause the commencement of commercial production (the “Delivery Requirement”) by April 20, 2013. If EAG does not complete a bankable feasibility study or take the project to production by April 20, 2013, then the Company has the option to purchase back the 75% of the Project from EAG for the lesser of (i) an amount equal to the expenses incurred by EAG and (ii) $6 million (the “Buy-Back Provisions”).
Under the provisions of the Amending Agreement, the Company has agreed to extend the Delivery Requirement date to April 20, 2016. The Company retains its rights under the Buy-Back Provisions if the Delivery Requirements are not satisfied by April 20, 2016. In consideration for the extension EAG will i) provide a financial guarantee to the Quebec government for the reclamation obligation on the Project and apply to transfer the reclamation obligation from the Company to EAG, ii) pay cash consideration to the Company of $615,000 and iii) remove the provisions in the Option Agreement requiring the Company to obtain the prior consent of EAG for the transfer of the Company’s interest in the Project.
The Amending Agreement further provides that if the Company exercises its rights under the Buy-Back Provisions and then takes the Project into production, the Company will pay to EAG the amount EAG has spent during the period from April 20, 2013 to April 20, 2016 from the proceeds of production, in priority to all amounts otherwise payable except senior debt, interest on senior debt, operating costs and $11.9 million (the Company’s previous exploration expenditures on the project).
The Company has also granted EAG a 90 day exclusivity period to negotiate the purchase of the Company’s interest in the Project.
The closing of the Amending Agreement is subject to EAG paying $615,000 in cash to the Company within 90 days from the date hereof. If EAG is unable to meet these conditions within 90 days, Noront retains its rights under the Buy-Back Provisions or if Noront does not elect to exercise the Buy-Back right, the Company’s interest in the Project will automatically increase to 30%.
In addition, the Company wishes to advise that it has signed a Termination Agreement with Maudore Minerals Limited (“Maudore”).
The Termination Agreement terminates the Purchase and Sale Agreement entered into between the parties on December 4, 2012, whereby Maudore was to acquire the Company’s 25% undivided right, title and interest in and to the Property. Accordingly, both parties are released from any further obligations under the Purchase and Sale Agreement.