Oct 15 2010
The Board of Guinness Exploration Inc., (OTC Bulletin Board: GNXP), announced today two significant agreements which set the stage for funding development of the Charlotte Project (formerly named the "Nantawa Project") in the Mount Nansen area of the Whitehorse Mining Division, of the Yukon Territory.
The first agreement is a Letter of Intent ("LOI") on October 12, 2010 with Ansell Capital Corp. ("Ansell"), TSX: ACP, and Eagle Trail Properties Inc. ("Eagle Trail") wherein Ansell will provide funding for development of the Charlotte Project. Under the LOI, Ansell will be allowed to acquire up to an 85% undivided interest in the 128 mineral claims which form the Charlotte Project. 49% of the interest to be acquired, can be acquired by Ansell paying to Eagle Trail the sum of Cdn$1,000,000, issuing 12,000,000 units of Ansell to Eagle Trail and by expending Cdn$5,000,000 on exploration of the Property within 3 years from the LOI Effective Date, of which Cdn$2,000,000 is to be spent in the first year. Of the cash consideration, Cdn$500,000 is payable on the LOI Effective Date and the remainder is payable 14 months thereafter. The 12,000,000 units of Ansell are due to be issued to Eagle Trail on the LOI Effective Date. Each unit of Ansell to be issued to Eagle Trail will consist of one common share and 0.67 share purchase warrants with one full warrant being exercisable to purchase one additional common share of Ansell at a price of Cdn$0.30 in the first year and Cdn$0.35 in the second year.
Upon approval by the TSX Venture Exchange, Ansell will become the Operator of the project. Subject to Ansell first acquiring the 49% undivided interest in and to the Property, Ansell has received the further right to increase its interests to an 85% undivided interest of which 26% can be earned by Ansell delivering to Eagle Trail and Guinness a bankable Feasibility Study on the Property and the final 10% can be earned by Ansell placing the Charlotte Project into commercial production. The Transaction is subject to prior TSX Venture Exchange approval and for the purposes of the LOI, the Effective Date is defined in the LOI as the date TSX Venture Exchange approval is obtained to the Transaction. Under the Nantawa Agreement between Guinness and Eagle Trails signed November 19, 2009, the Charlotte Project was encumbered with a 3% net smelter royalty ("NSR") due and payable to Eagle Trail. Under the LOI, Ansell has acquired the right to purchase 1% of this NSR in consideration of the sum of Cdn$1,500,000 provided Ansell has first acquired a 75% undivided interest in and to the Charlotte Project.
Subject to Ansell acquiring an 85% interest in and to the Charlotte Project, Guinness will retain a 7% carried working interest in and to the Charlotte Project and Eagle Trail will retain an 8% carried working interest.
The terms of acquisition are subject to Ansell receiving a technical report on the Property prepared in compliance with Canadian Securities Administrators' National Instrument 43-101 satisfactory to the TSX Venture Exchange and the Transaction being accepted by the TSX Venture Exchange for filing on or before February 1st, 2011.
John Hiner, B.Sc., L. Geo. is the Qualified Person, as defined under Canadian NI 43-101 standards, and will be responsible for the preparation of the technical information contained in this news release.
The second agreement is a Modification Agreement dated October 12, 2010 between Guinness and Eagle Trail which provides Guinness with compensation for the lapsed Tawa Claims by providing the Company with an immediate vesting of a 49% interest in the Charlotte Project without requirement to make further payments to Eagle Trail.
CEO Alastair Brown commented: "We very pleased with the arrangements we've now made for the Charlotte Project. The Modification Agreement stabilizes Guinness' interest in the Charlotte Project and has allowed us to negotiate what we believe are favorable funding arrangements with Ansell and Eagle Trail. We're looking forward to working with the Ansell team."
Mr. Brown continued, "We'd also like to announce some staff changes made this week. Specifically, due to other workload considerations, John Hiner has negotiated with Guinness to remove his duties as an officer of the Company and continue as our primary geological technical adviser effective immediately. We're pleased that John will continue to be a member of our team and will be involved with the Company's geological program for the foreseeable future. Parallel with this change, Mr. Nigel Mattison, director, has added the role of Secretary and Treasurer to his responsibilities for the Company."
Source: Guinness Exploration Inc.