Gunpoint Exploration (GUN-V) March 17, '15 wishes to announce that it has signed an Option agreement ("Option Agreement') with Timberline Resources Corporation (NYSE MKT:TLR)(TSX VENTURE:TBR) ("Timberline") whereby Gunpoint has granted Timberline an option to acquire a 100% interest in Gunpoint's Talapoosa gold project located in Nevada.
Gunpoint acquired Talapoosa from Chesapeake Gold Corp. (CKG-V) for consideration that resulted in Chesapeake becoming a majority shareholder with a 73% interest in Gunpoint. Since acquisition, Gunpoint has conducted extensive exploration work on Talapoosa including core drilling and metallurgical testing. The exploration work increased the size of the mineral resource and gold grade, compared to the previous resource estimate, by 40% and 20%, respectively (see NI 43-101 "Technical Report and Resource Estimate on the Talapoosa Project, Nevada" dated April 12, 2013 prepared by Tetra Tech). In addition, the technical work indicated that Talapoosa is amenable to a heap leach operation which has attracted industry interest in the project.
Pursuant to the Option Agreement, Timberline may exercise its option to acquire a 100% interest in Talapoosa ("Option") subject to the following terms and conditions:
In consideration for the Option, Timberline will pay Gunpoint US$300,000 (US$100,000 at closing and the balance within 180 days after closing) and will issue to Gunpoint 2.0 million shares of common stock of Timberline (subject to staged vesting over 24 months from closing).
The Option is exercisable by Timberline within 30 months from March 12, 2015 ("Option Period").
Timberline will use its reasonable efforts to complete a feasibility study on Talapoosa within the Option Period.
Any time during the Option Period, Timberline may exercise the Option to purchase 100% of Talapoosa by paying Gunpoint US$10.0 million ("Option Payment").
For a period of five years following the Option Payment, should the daily price of gold (as determined by the London PM Fix) be fixed at or above US$1,600 on any single day and at any time thereafter the daily price of gold (as determined by the London PM Fix) averages US$1,600 per ounce or more for (90 consecutive trading days ("Trigger Event"), Timberline will be required to pay Gunpoint an additional US$10.0 million ("Contingent Payment") within 90 days of the Trigger Event. The Contingent Payment will be a minimum cash payment of US$5.0 million with the balance payable in cash or shares of common stock of Timberline, at Timberline's discretion.
Upon Timberline's acquisition of a 100% interest in Talapoosa, Gunpoint will retain a 1% net smelter returns royalty ("NSR") which Timberline may purchase at any time by paying US$3.0 million to Gunpoint.
If Timberline does not make the Option Payment within the Option Period, Timberline will have not earned a vested interest in Talapoosa.
Randy Reifel, Chairman, commented, "We believe this is an excellent transaction for Gunpoint. Timberline has the technical team and experience to advance Talapoosa to the feasibility stage notwithstanding the existing challenging market conditions. Timberline's Nevada portfolio focus and commitment to fast track Talapoosa to production is potentially very rewarding to Gunpoint being a new significant Timberline shareholder and holding a 1% NSR."
Going forward, Timberline will be responsible for the Bureau of Land Management and related property payments to maintain Talapoosa in good standing. During the Option Period, Timberline will also assume Gunpoint's office and warehouse lease in Reno. Collectively, Gunpoint will realize annual savings of US$250,000 from these cost reduction measures.
Timberline has also agreed to employ Max Baker as part of their technical team to advance Talapoosa. As such, Max Baker will be stepping down as President of Gunpoint but will remain as a director of the Company. Randy Reifel, Chairman, will assume the position of President for Gunpoint. We would like to thank Max Baker for all of his dedication and contributions that have played an important role in Talapoosa's development which has led to the recent industry interest in the project and particularly the transaction with Timberline.
About Gunpoint Exploration Ltd.
Gunpoint is a publicly traded mineral exploration company. For a more information on Gunpoint and its exploration portfolio, interested parties are encouraged to visit the Gunpoint's website, www.gunpointexploration.com.
Gunpoint Exploration Ltd.
P. Randy Reifel
Chairman and President
604-731-1094 |
