Sep 9 2015
MDN Inc. is pleased to announce that it has signed a Heads of Agreement with Sichuan Xinye Investment Corporation of Mining and Exploration to enter into a joint venture whereby XINYE would be transferred, in escrow, 50% of interests in the Company's Ikungu and Ikungu East properties in Tanzania and would have the option of retaining such interests by investing up to US$7M in such Properties over a maximum period of 42 months.
Under the terms of the HOA, XINYE has 100 days to complete a due diligence review, which may include test drilling. During this period, MDN has agreed to an exclusivity of discussions with XINYE with respect to the Properties.
Should XINYE decides to pursue the proposed transactions following the due diligence period, and should other precedent conditions be met, the parties will negotiate a definitive agreement, providing up to US$7M of investments to be made at XINYE's option over three phases.
During the first phase, XINYE need to spend US$2M over an 18-month period to release from escrow 22% of the Interests in the Properties and would have the option of acquiring 100% of the Interests for US$3.5M + a royalty of US5$/oz of gold produced. If XINYE decides to continue to the second phase, another US$2M must be spent on the Properties within a twelve-month period to release from escrow an additional 14% of the Interests and XINYE may decide to acquire 100% of the Interests for US$4.5M + US5$/oz. During the third and final phase, XINYE must spend US$3M over 12 months to release the remaining shares from escrow to gain the full 50% Interest of the Properties. At that time, XINYE may choose to acquire 100% of the Interests for US$6M + US5$/oz royalty. XINYE has the option not to proceed with any Investments at any time, while retaining the Interest gained based on the Investments it has committed on the Properties.
The sums to be invested by XINYE on the Properties include a 10% ''administration fee" for MDN. Furthermore, following the completion of the due diligence review but before the signature of a definitive agreement, XINYE has the right to purchase 100% of the Properties for US$3M plus a US$5/oz royalty.
Should XINYE completes the US$7M initial investment, MDN may elect to maintain its participation in both Properties by funding its share of future investments. Should MDN decides not to participate and XINYE continues to invest in the Properties, MDN's Interests in the Properties would be diluted correspondingly, and should MDN's Interest become less than 20%, MDN's Interests would be transferred to XINYE in exchange for a 2% Net Smelter Return (NSR) Royalty, of which 1% may be purchased by XINYE for US$1.5M.
"We are delighted to have entered into this HOA for the Ikungu Properties with XINYE, a a resources Chinese state-owned corporation," commented Mr. Claude Dufresne, President and CEO of MDN. "This agreement highlights the quality of our Ikungu and Ikungu East properties in Tanzania. We are looking forward to working with XINYE in the development of these properties," added Mr. Dufresne.
Source: http://www.mdn-mines.com/