Canabrava/Paramount amends Ontario option agreement
Canabrava Diamond Corp CNB
Shares issued 38,070,506 Jul 24 close $0.20
Tue 24 Jul 2001 News Release
Also Paramount Ventures & Finance Inc (PVF)
Dr. Rory Moore reports
The option agreement of Canabrava Diamond Corporation and Paramount
Ventures & Finance with Kennecott Canada Exploration Inc., entered into in
1999, has been amended effective July 1, 2001. The principal points of the
amendment are: (a) the revised area of interest will include the Rocky
Island Lake project and the Pivot Lake claims; and (b) Canabrava will
assume the role of project operator with immediate effect. Canabrava has
already launched an aggressive summer exploration program.
Under the terms of the amendment, each party will be free to engage in
exploration outside the revised area of interest without obligation to the
other party. However, any land within the original area of interest
acquired by Kennecott or Canabrava before June 30, 2003, will be subject to
a 1.5-per-cent gross overriding royalty payable to the other party. The
royalty is capped at $10-million. Canabrava's share of this royalty will be
divided with Paramount according to each party's equity interest in the
project. Currently Canabrava and Paramount each hold a 50-per-cent interest
in the revised area of interest which covers over 11,500 square kilometres
and includes over 40,000 hectares of staked mineral claims. The acquisition
of these new claims was completed in the spring of 2001 following the
compilation of previous sampling data and an evaluation of the geochemistry
of recovered kimberlite indicator minerals.
In addition to the $800,000 already spent this year by Kennecott on the
project, Kennecott has committed to provide a further $350,000 of financing
for the remainder of 2001. Canabrava and Paramount will contribute an
additional $500,000 (split 50/50) for a combined total budget of $850,000
to be spent in the revised project area before year-end. In addition,
Kennecott has committed to provide a minimum of $500,000 in 2002, in order
to test at least 10 targets by drilling or trenching (subject to such
targets being developed for testing). However, in order to compensate for
the financing provided by Canabrava and Paramount in 2001, the first
$500,000 provided by Kennecott in 2002 will not be applied to its earn-in
commitment of the Ontario option agreement.
Upon $500,000 being spent in 2002, Kennecott may elect to recommence as
operator under the existing terms of the Ontario option agreement, which
are that Kennecott has the option to earn a 60-per-cent interest in the
project by spending $25-million before June 10, 2006, or by advancing the
project to a production decision, whichever occurs first. To date,
Kennecott has spent over $2.5-million toward its earn-in.
Canabrava's president, Dr. Rory O. Moore, stated that that he is very
pleased with the arrangement reached with Kennecott, since "it provides
Canabrava the opportunity to aggressively pursue a discovery within the
highest potential area identified on this project to date. The excellent
infrastructure of the project area ensures lower exploration costs, which
will enable a very significant program to be completed with the approved
budget of $850,000 for the next six months Canabrava's teams are highly
motivated and already in the field conducting the first phase of a planned
four-phase summer/fall exploration program which will consist of a
combination of prospecting, mapping, till sampling, airborne geophysics and
possibly drilling."
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