Osisko Mining Corporation is pleased to announce that it has received the final $30 million payment from Kirkland Lake Gold Inc. pursuant to a property sale agreement between KL Gold and Queenston Mining (“Queenston”).
Osisko has filed the transfer application which leads to the final steps of the purchase and sale agreement ("Agreement") dated March 27, 2012 between KL Gold and Queenston pursuant to which Queenston had agreed to sell its 50% interest in the properties held under Joint Venture ("JV") with KL Gold located in Teck Township to KL Gold for $60 million cash and a royalty, subject to the terms and completion of the conditions set out in the Agreement.
The original terms of the sale were a $10 million non-refundable cash payment on signing, $20 million cash on closing (both completed prior to Osisko’s acquisition of Queenston), and $30 million cash due on December 3, 2012. Upon closing of the sale, Queenston received a promissory note representing the balance of the purchase price payable in the principal amount of $30 million, accruing interest at a rate of prime plus 2.5% per annum, secured by way of a first fixed charge and mortgage on the JV properties that are the subject of the sale, that was due and payable on December 3, 2012. Payment of this promissory note was not completed on schedule due to a delay by the Ontario government in dividing a mining lease in two separate parts. The promissory note was subsequently modified to an escrow deposit in early 2013 which was payable to Osisko upon completion of the land title transfer application. The land title transfer application was filed with the Ontario government on June 27, 2013 and the escrow funds have been released to Osisko.
Although Osisko has no reason to believe that Consent (“the Consent”) by the Ministry of Northern Development and Mines (”MNDM”) will be refused or delayed, the company has agreed that should Osisko not receive Consent to transfer the Queenston claims to KL Gold by September 30, 2013, Osisko will return the escrow funds (“the Funds”) to KL Gold and use its best efforts to obtain the Consent and to register the transfer of the land title to KL Gold as soon as possible thereafter, at which time the Funds would be repaid to Osisko.
As part of the original transaction, Osisko also maintains the right to receive a royalty equal to $15 per ounce on any gold produced from the sold properties after the first 1.3 million ounces of gold have been produced, for the next 1 million ounces produced; and $20 per ounce on any gold produced thereafter.
Source: http://www.osisko.com/