Will - here are more details. This might help to explain the sudden drop in DBL share prices today:
October 5, 1998
Principal Terms Of Letter Agreement Between Darnley & Falconbridge
DARNLEY BAY RESOURCES LTD ("DBL-V;DNLYF-L")
FALCONBRIDGE LTD ("FL,FL.UN-TM;FBDGF,FLBPF-L")
- Principal Terms Of Letter Agreement Between Darnley & Falconbridge
Leon La Prairie, Director of DARNLEY BAY RESOURCES LTD announces that further to the Company's press release of September 30, 1998 regarding the participation of Falconbridge Limited ("Falconbridge") in the Company's program to evaluate the mineral potential of the Darnley Bay anomaly, the following are the principal terms of the letter agreement of September 30, 1998 between the Company and falconbridge:
Subject to its due diligence to be completed within 20 days of the agreement and to the approval of the Inuvialuit. Falconbridge may subscribe for $250,000 of the Company's public offering of units for which it has filed a preliminary prospectus.
To identify potential drilling targets, the Company proposes to carry out a program of ground electromagnetic and gravity surveys, and mapping and sampling. Falconbridge will provide technical assistance.
Based on the results of the ground program, the agreement provides for a drill program of at least 5,000 metres. If Falconbridge subscribes for $250,000 of the Company's public offering, it will have the right to contribute one-half of the cost of the drill program, with entitlement to delay its contribution subject to a delay penalty. If it contributes its share of such cost. Falconbridge will then be entitled to select a designated project in the anomaly in which the Company will assign to Falconbridge, from the Company's interest, an interest equivalent to an overall 51% participating interest. In such event, as currently provided in the Company's concession agreement with the Inuvialuit, if the latter shall elect to maintain their available share-cost participation in the first designated project, the Company's retained interest in such first designated project would reduce to a range of 24% to 14%, and the Inuvialuit's additional net smelter return royalty would therefore not be applicable.
Thereafter Falconbridge will be entitled to continue contributing one-half of the Company's cost exploring the remaining area of the anomaly to earn 50% of the Company's interest in any additional
designated projects.
Joint ventures will be formed for the designated projects. Falconbridge will be the operator of designated projects so long as it maintains a 50% interest. Falconbridge will have the first right to treat ores and concentrates and to market all metals form the joint ventures.
Falconbridge and the Company will use their best efforts to finalize a more complete agreement incorporating the terms of the letter agreement and any other mutually agreeable terms by November 30, 1998, and to obtain requisite approval from the Inuvialuit, the indigenous people of the region, with whom the Company has a concession agreement governing the exploration and development of the anomaly area.
TEL: (416) 862-7885 Leon La Prairie, Director FAX: (416) 862-7889
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The market obviously does not like this development. DBL appears to be giving up a large piece of the most promising ground, for very little in return. Nice deal for Falconbridge! Question: Who ends up paying the Inuvialuit for the concession rights?
Will: did you get stung? How large a position were you holding? Just my (hopefully changing) luck that I had not yet bellied up to the bar....
Regards,
Grant. |
