Montello Resources Ltd -
Proposed option agreement on Legend block with Kennecott
Montello Resources Ltd
MEO
Shares issued 35,719,337
1998-07-24 close $0.39
Monday Jul 27 1998
Also Redwood Resources Inc (RDW)
Mr. Patrick Power of Montello Resources reports
Montello Resources and Redwood Resources have entered into a letter of intent
to enter into an option agreement whereby Kennecott Canada Exploration would
earn a 60 per cent interest in the Legend property (70 per cent Montello/30 per
cent Redwood) in the province of Alberta. The Legend property consists of
approximately 1.5 million acres and is 50 kilometres to the northeast of the
AEC/Ashton/Pure Gold discovery block. All payments and private placements
shall be divided 70 per cent to Montello and 30 per cent to Redwood. Redwood
has waived the right to earn an additional 20 per cent interest in the Legend
property.
Pursuant to the terms of the proposed option agreement, Kennecott must make
private placements in Montello and Redwood of the cumulative amount of
$275,000 on closing. The initial private placement of $275,000 shall be for
256,666 units of Montello at 75 cents and 55,000 units of Redwood at $1.50.
The warrants attached to the units shall be exercisable at $1.50 for Montello and
$3.00 for Redwood at any time prior to July 21, 2000. A subsequent firm private
placement of $175,000 must be made on or before Jan. 15, 1999 and a
$600,000 private placement must be made upon commencement of the first 10
tonne bulk sample on any kimberlite pipe on the property. The pricing of the
$175,000 private placement and the $600,000 private placement shall be the 10
day trading average immediately preceding that date plus 25 per cent. Each
private placement shall consist of a common share and a warrant exercisable at a
price equal to 150 per cent of the private placement price for two years from the
date of the private placement.
Kennecott shall solely make all expenditures required to bring the project to a
mutual decision to mine or by making exploration expenditures totalling
$30-million over seven years, whichever shall occur first. Kennecott shall expend
$500,000 prior to May 30, 1999 and an additional $4,500,000 on or before May
30, 2003.
Upon the commencement of commercial production from a mine within the
property boundaries, Kennecott shall pay the additional sum of $2,000,000.
Kennecott has recently reviewed the high resolution airborne survey data on the
Legend property and conducted ground geophysical surveying on a number of
airborne targets which show kimberlite pipe-like characteristics on the property.
Drilling is expected to be under way by late August or early September. |
