LANCASTER CAPITAL CORP. ("Lancaster" or the "Company"), (TSX VENTURE:LHC) is pleased to announce that it has entered into an earn-in agreement (the "Agreement") with Meliadine Gold Ltd. ("Meliadine") to earn up to a 70% interest in the Peter Lake Gold property (the "Property").
The Property is located approximately 40 km northwest of Rankin Inlet, Nunavut. The Property covers 8,473 hectares within the Meliadine Gold Belt immediately along trend from Agnico Eagle Mines Ltd.'s advanced Meliadine Gold project. Multiple clusters of quartz carbonate boulders containing high grade gold have been discovered on the Property with strong evidence that the potential bedrock source is also on the Property. These high grade gold boulders may be sourced from the Pyke Fault and associated splay structures that trend through the middle of the Peter Lake Property, and also hosts the Meliadine Gold project further to the southeast.
The Board of Directors of Lancaster is in the process of considering a short list of candidates for a new CEO and senior management team to lead the Company in pursuing this new project.
Pursuant to the Agreement, Lancaster has the exclusive right to earn an initial undivided 50% interest in the Property (the "First Earn-In Option") upon: (i) incurring an aggregate of $10 million in expenditures on the Property by the third anniversary of the date all regulatory approvals to the Agreement are received (the "Effective Date") (allocated as: $1 million on the first anniversary, an additional $4 million on the second anniversary and an additional $5 million by the third anniversary of the Effective Date); and paying $75,000 in cash on each of the Effective Date, and the first, second and third anniversary of the Effective Date.
Upon earning a 50% interest in the Property, Lancaster has the exclusive right to earn an additional undivided 20% interest in the Property (the "Second Earn-In Option"), thereby increasing its interest in the Property to 70%, upon:
- incurring an aggregate of $25 million in additional expenditures on the Property, as follows:
- incurring a minimum of $2 million in expenditures on the Property in the year ending on the fourth anniversary of the Effective Date;
- incurring an additional $3 million in expenditures on the Property in the year ending on the fifth anniversary of the Effective Date;
- incurring an additional $5 million in expenditures on the Property in the year ending on the sixth anniversary of the Effective Date;
- incurring an additional $15 million in expenditures on the Property in the year ending on the seventh anniversary of the Effective Date;
- preparing and delivering to Meliadine a Bankable Feasibility Study by the seventh anniversary date of the Effective Date; and
- paying $75,000 in cash on each of the Effective Date, and on the fourth, fifth, sixth and seventh anniversary date of the Effective Date.
Lancaster has the right, to satisfy its obligation to incur any of the expenditures required by the First Earn-In Option or Second Earn-In Option, by paying or delivering to Meliadine an equivalent amount in cash or common shares of Lancaster.
Pursuant to the Agreement, Lancaster may elect to extend the delivery date of the BFS for a maximum of three (3) years in consideration for payment to Meliadine of $2.5 million in cash for each additional one-year extension. Lancaster is also entitled, at any time after exercise of the First Earn-In Option and for no additional consideration, to extend the time for payment of any of the expenditure requirements in respect of the Second Earn-In Option by up to one year.
Lancaster shall be appointed as exclusive operator of the project and shall remain as operator unless it fails to exercise the Second Earn-In Option.
Upon Lancaster earning either a 50% interest in the Property and terminating the Agreement or earning a 70% interest in the Property, the parties shall be deemed to have formed a joint venture pursuant to which both parties will contribute their proportionate share of future expenditures. Upon either party reducing its interest to 15% in the joint venture, such interest shall be converted to a 2.5% net smelter return royalty.
The Agreement is subject to the approval TSX Venture Exchange approval.
Neither TSX Venture Exchange nor its Regulations Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.