Riverside Resources (RRI-V) new partner, Morro Bay Resources (MRW.P-V) Jan 23, '14 has completed its qualifying transaction, whereby it has acquired from Sierra Madre Developments Inc. an option to earn an initial 51-per-cent and up to 65-per-cent interest in Riverside's Penoles project. As a result of the transaction, Riverside has received 3,705,974 Morro Bay common shares and 1,852,987 Morro Bay warrants. Morro Bay will also finance a minimum of $750,000 in exploration and drilling at the Penoles project that will aim to build on last year's results at the historic Jesus Maria silver mine area.
Riverside's president and chief executive officer, John-Mark Staude, commented: "We are very pleased with the speed with which this transaction closed, and look forward to final preparations and planning for upcoming drilling at the Penoles project. There are several highly prospective targets in addition to the known Capitan, Jesus Maria and San Rafael zones, and we look forward to unlocking some of this potential in the weeks and months ahead."
In addition to the $750,000 in exploration expenditures, remaining requirements for Morro Bay to earn an initial 51-per-cent interest in the Penoles project include payments to Riverside of $1.35-million in cash, and the payment of a further $1.5-million in cash and/or Morro Bay shares, at Morro Bay's election subject to certain conditions. Morro Bay can earn an additional 14-per-cent interest in the project by paying $30,000, incurring an additional $5-million in exploration expenditures, and paying an additional $750,000 in cash and/or Morro Bay shares, again at Morro Bay's election subject to certain conditions. Further details are available on the company's website.
Transaction details
To acquire its interest in the Penoles project from Sierra Madre, Morro Bay issued to Sierra Madre 16 million common shares at a deemed price of 10 cents and eight million common share purchase warrants, each exercisable into one common share at a price of 15 cents until June 15, 2014, and thereafter at a price of 25 cents until their expiry on the first anniversary of the date of their issuance. Sierra Madre has agreed to distribute the 16 million common shares and eight million warrants so received pro rata to its shareholders, and Riverside holds more than 12.5 million Sierra Madre common shares representing approximately 23 per cent of the issued and outstanding Sierra Madre shares. Pursuant to the terms of the transaction, it was agreed that Riverside would receive its common shares and warrants at closing, and accordingly Riverside has now received 3,705,974 common shares and 1,852,987 warrants. Riverside understands that the balance of the common shares and warrants held by Sierra Madre will be distributed to its shareholders as a dividend in kind. Riverside has agreed to waive its right to receive any portion of the remaining common shares and warrants pursuant to the dividend.
The common shares and warrants received by Riverside are subject to a four-month-and-one-day hold period expiring on May 23, 2014. As a part of the transaction, Riverside has agreed to place 2,594,182 of the common shares in escrow until Dec. 31, 2014. |
