Nortec enters option agreement with Vulcan on TL
2003-12-18 15:27 ET - News Release
Mr. Mohan Vulimiri reports
NORTEC VENTURES CORP. ENTERED INTO AN OPTION AGREEMENT WITH VULCAN MINERALS ON THE TL PROPERTY, NORTHERN LABRADOR AS PART OF THE QUALIFYING TRANSACTION.
Nortec Ventures has entered into an option agreement, dated May 14, 2003, with Vulcan Minerals, a party with whom the company deals at arms-length. Vulcan is a mining and an oil and gas issuer, listed on the TSX Venture Exchange with its corporate offices located in St. John's, Nfld. Nortec may earn up to 100-per-cent interest (subject to royalty) in the TL property, consisting of mineral licences 7682M and 8091M, located in northern Labrador. The company is required to advance an initial $20,000 deposit, which may be retained by Vulcan if the Exchange fails to accept the option agreement for filing. If the option agreement is accepted for filing, Vulcan is required to repay the deposit to the company.
Qualifying transaction, TL property
Option agreement
The option agreement is as follows: Nortec may earn a 51-per-cent interest in and to the TL property by making the payments, delivering the shares and warrants of the company and incurring the expenditures in exploration described below.
Time Payment Expenditure
TSX-V
approval 500,000 none
shares
500,000 warrants at 20
cents (first year),
25 cents (second year)
First
anniversary $10,000 $100,000*
Second
anniversary $20,000 $200,000
Third
anniversary $20,000 $300,000
Fourth
anniversary $20,000 $400,000
Fifth
anniversary $30,000 $500,000
Any excess expenditures in any year by Nortec will be carried forward and applied to future expenditure obligations. Should Nortec fail to make all the above expenditures and payments it shall not earn any interest in the property and the agreement shall terminate.
If Nortec earns a 51-per-cent interest, Vulcan has the option to elect to participate in a joint venture as to its 49-per-cent interest or Vulcan may allow Nortec to earn an additional 24-per-cent interest (total of 75 per cent) by issuing 200,000 shares to Vulcan and expending $5-million over three years. If Nortec earns a 75-per-cent interest, Vulcan has the option to elect to participate in a joint venture as to its 25-per-cent interest or Vulcan may allow Nortec to earn an additional 15-per-cent interest (total 90 per cent) by issuing 200,000 shares to Vulcan and expending $5-million over three years, whereupon Vulcan's remaining 10-per-cent interest would convert to a 2.5-per-cent-net-smelter-return interest. If Vulcan elects to participate as a joint venture contributor at any time after Nortec earns its 51-per-cent interest, Nortec may elect to convert its interest to a 2.5-per-cent-net-smelter-return interest. Nortec will be the operator of the project.
Property description
The TL property is located in northern Labrador, Canada, about 70 kilometres west of the coastal community of Nain and 400 kilometres north of the town of Goose Bay. It is situated approximately 50 kilometres northwest of the Voisey's bay nickel-copper-cobalt property, presently under development by Inco Ltd.
Previous work on the property was conducted in two periods, in 1995 to 1996 by Consolidated Magna Ventures Ltd. And Consolidated Viscount Resources Ltd., and in 2001 by Falconbridge Ltd. The earlier work consisted of airborne and ground geophysical surveys, mapping, prospecting and sampling, and two stages of diamond drilling for a total of 3,738 metres in 40 holes. The work mainly focused on nickel-copper showings hosted in mafic dikes and adjacent gneiss in the Long Pond area. During the second period, Falconbridge conducted geochemical and UTEM-geophysical surveys. A large and very strong conductor was identified in the south-central part of the property. Graphitic gneiss was intersected in widespread drilling of the anomaly. The presence of nickel-copper mineralization hosted in nearby mafic dikes and geological similarities to the Voisey's Bay property, suggest that massive sulphides may occur along the conductor and further work is warranted.
Exploration expenditures on the TL property totalled $110,984.62 for the last three years and therefore the TL property qualifies as a significant asset.
Additional UTEM and gravity surveys are recommended in phase 1 to cover most prospective parts of the property, including the Falconbridge UTEM anomaly. Contingent on positive results from these surveys, drilling is recommended in phase 2.
The TL report authored by Phillip Saunders, BSc, PGeo, and William Scott, PhD, PEng, PGeo, recommends that future exploration on the TL property proceed in two phases, with drilling in the second phase contingent on obtaining positive results in phase 1.
The phase 1 recommended program consists of:
re-establishment of former grids;
modelling of the UTEM results to obtain estimates of the depth at which the largest conductance lie;
a further UTEM survey to test the region around the east-west mafic dike;
a gravity survey; and
field mapping and sampling.
The phase 1 recommended work program is budgeted at $208,498.
If the phase 1 results provide valued drill targets, then a phase 2 budget for 1,000 metres of drilling at an estimated cost of $275,800 is proposed. However such budget can only be settled once phase 1 results are known.
This proposed qualifying transaction would result in Nortec Ventures changing from a capital pool company to a mining issuer. The resulting mining issuer will have the same board of directors as well as one new officer/director and a corporate secretary, who will be appointed on the completion of the qualifying transaction. The present members of the board have been involved in the mining sector for the majority of their professional careers.
Other properties being acquired
Little River property
Option agreement
Pursuant to an option agreement dated May 27, 2003, and as amended Dec. 3, 2003, between the company and Vulcan, the company was granted an option (subject to TSX approval) to acquire up to a 100-per-cent interest (subject to royalty) on two mineral licences, in central Newfoundland known by the parties as the Little River property.
On a similar basis to the TL property, the company may earn up to a 100-per-cent interest (subject to royalty) in the property by issuing shares and warrants, making cash payments and incurring expenditures on the property over a five-year period as follows:
Nortec may earn a 51-per-cent interest in and to the Little River property by making the following payments to Vulcan and incurring the following annual expenditures, on or prior to the specified time:
Time Payment Expenditure
TSX-V
approval 300,000 none
shares
300,000 warrants at 20
cents (first year),
25 cents (second year)
First
anniversary $10,000 $100,000*
Second
anniversary $20,000 $200,000
Third
anniversary $20,000 $300,000
Fourth
anniversary $20,000 $400,000
Fifth
anniversary $30,000 $500,000
Plus
200,000
shares
* If for some reason Nortec is unable to incur the required $100,000 in expenditure on the TL property, the parties agree that Nortec may, at its election, meet such obligation by expending such $100,000 commitment on the Little River property, which expenditures would be in addition outlined in the above table.
Any excess expenditures in any year by Nortec will be carried forward and applied to future expenditure obligations. Should Nortec fail to make all the above expenditures and payments it shall not earn any interest in the Little River property and this agreement shall terminate
On a similar basis as under the option on the TL property, the company may, but is not obligated to, increase its interest (in two stages) in the Little River property, if Vulcan elects not to participate in future programs, to a 100-per-cent interest subject to a 2.5-per-cent-net-smelter-return royalty in favour of Vulcan by incurring additional expenditures in an amount of $10-million and issuing a further 400,000 shares to Vulcan.
Property description
The Little River property consists of two map-staked mineral licences, solely owned by Vulcan, located in southern Newfoundland approximately 14 kilometres east of the coastal community of Milltown and 130 kilometres southwest of Gander, a regional service centre with regular commercial air service.
The majority of past exploration within the area occurred in the mid-to-late 1980s, following discovery of the Hope Brook gold deposit, a gold resource of nearly two million ounces. Westfield Minerals recognized the similarities of the host rocks of at Hope Brook to those of the Bay d'Espoir Group and of particular interest the Isle Galet formation. Large reconnaissance geochemical surveys identified numerous multielement soil anomalies along the Little River Horizon. Exploration consisted of soil sampling, prospecting and mapping in 1985, followed by further sampling, mapping, trenching and diamond drilling in 1986, further sampling, VLF and magnetic surveys, reinterpretation of 1977 airborne surveys and diamond drilling in 1987, and further drilling in 1987 and 1988. In total, Westfield drilled 50 drill holes over a three-year period primarily testing two prospects, the Wolf Pond zone and the 22 West zone.
Two distinct styles of gold mineralization have been described at Little River. These are:
disseminated sulphides including arsenopyrite, pyrrhotite, pyrite and stibnite, associated with carbonate alteration and hosted in felsic to intermediate tuffs and pelite; and
antimony and sulphide-bearing quartz plus or minus carbonate-sericite-chlorite veins, fractures and foliation-parallel bands. These styles have been interpreted either as stratabound and related to favourable stratigraphic horizons, or structurally controlled and related to crosscutting faults.
The Little River report, authored by Phillip Saunders, BSc, PGeo, of Saunders Management, states that mineralization discovered to date is subeconomic and continuity within the zones has not been demonstrated. However, the grades and widths obtained are significant, and drilling to date has been mostly shallow. The author considers that the Little River property merits additional exploration. He recommends that future exploration should proceed in two stages. Phase 1 recommendations consist of updating (and digitizing) compilation maps produced by Westfield to include trench and drill-hole locations and results. Restoration or repicketing of approximately 11 kilometres of grid lines, a new orientation IP and detailed magnetic survey over the 22 West prospect to determine if the response to mineralization can be distinguished from that of nearby graphitic units. Three drill holes are recommended initially to test existing targets in the better grade mineralization of the 22 West zone. Dependent on the results of phase 1, a phase 2 program consisting of further geophysical surveys and additional drilling is proposed. The phase 1 program is budgeted at $102,210.
Financial arrangements
The company is offering to raise $463,000 through an offering memorandum consisting of up to 9.26 million common shares at a price of five cents per common share. The company has $100,000 on hand from an earlier private placement consisting of two million common shares at a price of five cents per common share. The private placements will have applicable hold periods and are subject to receipt of exchange approval. Assuming the maximum offering is completed, the financing arrangements are as follows:
NET PROCEEDS AND AVAILABLE FUNDS
Assuming Assuming
min max
offering offering
Amount to be raised
by this offering $331,000 $563,000
Amount received
from earlier
placement $100,000 $100,000
Selling commissions
and fees nil n/a (1)
Estimated offering
costs (eg. legal,
accounting, audit.) $10,000 $10,000
Net proceeds:
D = A - (B + C) ($421,000) $553,000
1. The company has agreed to pay a fee of 7.5% of funds raised by registered representatives in shares of the Company at a deemed price of $0.05 per share.
Use of available funds
The available funds will be used as follows:
Description of Assuming Assuming
intended use of min max
available funds offering offering
listed in
order of priority
To settle
accounts payable $60,204 $60,204
Phase one work
program TL
property $208,498 (1)$208,498
Phase One work
program Little
River property $102,210 (2)$102,210
General corporate
purposes $50,088 $182,088
Total $421,000 $553,000
Nortec needs the financing of $563,000, consisting of the two private placements described above, to close to allow the company sufficient working capital to meet the minimum listing requirements as well as to fulfil the work expenditure obligations and option payments on the TL property and the Little River property.
Disclosure
There is no direct or indirect beneficial interest of any of the non-arm's-length parties to the CPC in the proposed significant assets. The non-arm's-length parties, insiders, associates, affiliated entities and other related parties are also not expected to receive any beneficial interest, direct, indirect or pro rata, as a consequence of the transaction.
Previous attempted qualifying transactions
In November, 2002, Nortec, on the recommendation of the board of directors, terminated the proposal to acquire worldwide distribution rights to Cast365, a software based on multicasting technology, together with certain related tangible assets (Cast365) from EGC&C Co. Ltd. of Korea.
Further to the news in Stockwatch dated Sept. 19, 2001, Jan. 29, 2002, and July 10, 2002, an agreement between the Nortec and EGC&C was reached Sept. 11, 2001. The closing date of the qualifying transaction was extended to June 30, 2002. The parties have not reached mutually acceptable terms with regard to an amendment of the agreement to further extend the closing date.
The company withdrew its application to the TSX Venture Exchange for the acquisition of Cast365. No funds related to this transaction were advanced to EGC&C. |
