I think you are partially correct. In Argentine, a fee equivalent to US$400 per 500 ha unit is due when the cateo (exploration concession) is granted. Cateos are typically granted for terms ranging from 150 to 1,000 days, which period begins to run 30 days after the date of the grant. The cateos have to be renewed when they expire. This is the deal that all landholders have with the government.
Diablillos is not owned by the government. PFN agreed to buy the property in Dec 1993. This was amended in May 1996. The landholder is Abra de Mina, S.A. PFN agreed to pay US$5,155,000 to Abra and make minimum exploration expenditures of US$500,000 for the 3600 ha Diablillos prospect. PFN also had to prepare a pre-feasibility study, which has been done.
On March 14, 1996 the Issuer entered into a letter of intent with Barrick and formed Salta to hold the shares of Pacific S.A. a 100% owned sub of PFN which holds the property agreement with Abra. Barrick bought 70% of Salta for a nominal amount and agreed to take on the terms of the underlying agreement with Abra and some additional expenditures detailed in the Salta agreement.
Barrick may at its option make voluntary additional exploration expenditures on the Diabillos Property provided that Salta has the option to purchase all of the Shares for US$10,000 or reacquire the Diablillos Property if Barrick fails to make additional exploration expenditures, inclusive of the US$81,667 purchase price, as follows:
- US$1,500,000 on or before June 26, 1997 (incurred);
- an additional US$2,000,000 on or before June 26, 1998 (incurred);
- an additional US$3,000,000 on or before June 26, 1999 (incurred);
- an additional US$4,000,000 on or before June 26, 2000 (incurred); and
- an additional US$4,000,000 each 12 month period beginning on the fourth and subsequent anniversaries of the Share Purchase Agreement terminating on the subsequent anniversary of the date of the Share Purchase Agreement until a decision is made by Pacific S.A. to place
the property or any portion of it into commercial production.
As at August 31, 1997 Barrick had spent US$13,053,646. If Barrick makes a determination to so cease making such
expenditures, Barrick is required to notify PFN as to whether Barrick will cause Salta to purchase the Shares for US$10,000 or will cause Salta to redeem the shares of Salta owned by the Issuer in exchange for all right, title and interest of Pacific S.A. in and to the Diablillos Property.
Barrick was required to spend US$14.5 million before June 26 2000. They probably have done so. What we don't know is did they spend the required US$4 million before June 2001? Clearly Barrick has the put but the landowner Abra is still in the picture no matter what Barrick does. I guess we have to wait and see. So the deadline was June 26, 2001 for barrick. We don't know when PFN can exercise its option to acquire the property title from Abra.
There's been over US$20 million spent on this property. I don't know where you got the idea that it's worth US$5 million, maybe it is maybe it isn't. We'll see. |
