Posted in | Mining Business

Mandalay Resources Strikes Non-Binding Heads of Agreement with Equus Mining

Mandalay Resources Corporation reports that it has signed a non-binding Heads of Agreement with Equus Mining, whereby Equus gets a three-year period (“Option Period”) to explore the Cerro Bayo mine district spanning 29,495 hectares in Region XI, Southern Chile.

The Heads of Agreement considers an Option Period in which Equus can use its option to obtain all the issued share capital of Compania Minera Cerro Bayo Ldta. (“CMBC”), including its mining properties, mine infrastructure, and resources at Cerro Bayo, as well as the 1,500 tpd processing plant, which is presently on care and maintenance.

The Heads of Agreement has a stipulation that at 18 months both parties have the right to end the agreement.

In case Equus exercises its option to purchase CMBC, consideration to Mandalay comprises:

  • the issue to Mandalay of 19% of Equus’ share capital; and
  • a 2.25% net smelter royalty on production from the Cerro Bayo mining claims once the mine has yielded a minimum of 50,000 oz. of gold equivalent, conditional on a re-purchase option supporting Equus.

Furthermore, Equus will assume 50% of the permitted site closure costs at Cerro Bayo.

Completion of the transaction is dependent on several conditions precedent, including the accomplishment of definitive agreements with regard to the transaction, third-party consents, and the approval by the Board of Directors of both the companies.

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