Pele Mountain Resources Inc. ("Pele" or the "Company") is pleased to announce the execution of a definitive agreement whereby Pele will sell its Pigeon River project (the "Project") to Zara Resources Inc. (CNSX:ZRI) ("Zara") for a purchase price of $700,000 payable in Zara stock.
Pele President and CEO Al Shefsky stated, "In order to better focus on advancing development at our Eco Ridge Mine Rare Earths and Uranium Project, our goal is to find qualified partners to fund and operate our non-core projects or to sell them outright. We believe Zara and its team will capably explore the project and we are pleased to convert our stake into an equity and royalty interest. We wish Zara every success in its efforts at Pigeon River."
Pele will receive its consideration in the form of 2.25-million Common Shares of Zara at an issue price of $0.10 per share, and 4.75-million Non Voting Convertible 5-percent Preference Shares of Zara, also at an issue price of $0.10 per share. The Preference Share annual yield of 5.0 percent will be payable in common shares of Zara at the prevailing market price. The Project will be subject to a 2-percent Royalty, of which 0.5-percent will be granted to Pele on closing and 1.5-percent will be granted to 2212150 Ontario Inc. operating as Vanex Exploration ("Vanex"). Pele may buy up to 1.0-percent of the NSR from Vanex for $1-million. The closing of the sale of the Project remains subject to standard closing conditions, including regulatory approval of the issuance of the shares.
In 2009, Pele staked the Pigeon River Project, which is currently comprised of 418 mining claim units in the Pigeon River area of northwest Ontario, 80 kilometres southwest of Thunder Bay. The property covers large unexplored magnetic targets near the basal contact of the Duluth Complex with potential to host nickel, copper, and platinum group element mineralization.