Good call ponokee!
Sanatana opposes Trelawney's Watershed easements
2013-04-29 09:16 ET - News Release
Mr. Peter Miles reports
SANATANA RESPONDS TO TRELAWNEY EASEMENT APPLICATION ON WATERSHED PROPERTY
Sanatana Resources Inc. is providing an update to its shareholders with respect to the Watershed property. Set out below is a summary of recent developments with respect to the Watershed property and a historical review of the binding agreement governing the Watershed property.
Peter Miles, president and chief executive officer of Sanatana, stated, "On Friday, April 26, 2013, Trelawney Mining and Exploration Inc. (a subsidiary of Iamgold Corp.) filed an application with the Ontario Mining and Lands Commissioner in connection with proposed easements on the Watershed property. The commissioner made an order for Trelawney and Sanatana to file materials in support of their positions by June 3, 2013, and July 3, 2013, respectively. We object to the proposed easements based on a number of grounds and we look forward to the opportunity to make our position known to the commissioner. A copy of the order to file materials with the commissioner will be posted on our website. Sanatana has a contractual right with Trelawney Augen Acquisition Corp. (also a subsidiary of Iamgold) to acquire up to a 51-per-cent undivided interest in the Watershed property free and clear of all encumbrances -- including, for example, easements. We will defend the rights that we are contractually entitled to."
Recent developments with respect to the Watershed property
On Friday, April 26, 2013, Trelawney Mining and Exploration, a subsidiary of Iamgold, filed an application with the Ontario Mining and Lands Commissioner with respect to proposed easement rights on the Watershed property. The Commissioner subsequently made an order for Trelawney and Sanatana to file materials in support of their positions by June 3, 2013, and July 3, 2013, respectively. As a result of the order to file, the Provincial Recording Office, Ministry of Northern Development and Mines, has or will note pending proceedings on the abstracts of the subject mineral claims, being P-3004844, 3010239, 3014374, 3017665 to 3017668, both inclusive, 3018411, 3018437, 3019033, 4203839, 4203852, 4203294, 4209355, 4227171, 4240907 and 4240908.
Sanatana objects to the proposed easements on a number of grounds and the company looks forward to the opportunity to make its position known to the commissioner.
Summary of the option and joint-venture agreement -- Watershed property
Sanatana entered into an option and joint-venture agreement on the Watershed property with Augen Gold Corp. (as it then was), effective Feb. 14, 2011. Augen was subsequently acquired by Trelawney and, through a corporate reorganization, Augen was renamed Trelawney Augen Acquisition (TAAC). Trelawney was then subsequently acquired by Iamgold.
The option and JV agreement was originally announced on Feb. 16, 2011, and was accepted for filing by the TSX Venture Exchange on March 23, 2011. Copies of the news releases issued by Sanatana and Augen (as it then was) are available on SEDAR under Sanatana's profile and TAAC's SEDAR profile, respectively. A redacted copy of the option and JV agreement was also posted to Sanatana's SEDAR profile on May 8, 2012.
Readers are encouraged to access and review a copy of the option and JV agreement.
ROFR claims and 50-per-cent interest
Under the terms of the option and JV agreement, Sanatana has the option to acquire up to a 51-per-cent undivided interest in the rights to 46 mineral concessions in Ontario, free and clear of all encumbrances. The property is located within the townships of Yeo, Chester, Neveille and Benneweis, and totals approximately 19,006 acres.
In November, 2012, Sanatana exercised its first option and acquired a 50-per-cent undivided interest in the property. In order to exercise the 50-per-cent interest, Sanatana paid to TAAC $150,000 in cash, issued five million common shares and incurred over $5-million in work costs.
Pursuant to the terms of the option and JV agreement, in addition to the option to acquire up to a 51-per-cent interest in the property, Sanatana has the right of first refusal to acquire, on or before March 23, 2014, nine additional mineral claims from TAAC. The ROFR claims are located in the township of Chester and comprise approximately 736 acres.
Pursuant to the terms of the option and JV agreement, Sanatana is the registered owner of the property, which is to be held in trust for the benefit of the parties in accordance with their respective interests therein.
Additional 1-per-cent interest and joint venture
Pursuant to the terms of the option and JV agreement, Sanatana has the right to earn a further 1-per-cent interest in the property, for a total undivided interest of 51 per cent, free and clear of all encumbrances. In order to earn the 51-per-cent interest, Sanatana must prepare and deliver to TAAC (at Sanatana's sole cost) a prefeasibility study on or before March 23, 2016. Sanatana is considering its options in this regard and has until March 23, 2016, to decide whether to exercise its right to acquire the 51-per-cent interest. If Sanatana exercises its right to acquire the 51-per-cent interest, the parties would on the date of such exercise form a joint venture to further explore the property on the terms described below. Alternatively, if Sanatana surrenders its right to acquire the 51-per-cent interest, the parties would form the joint venture on the date Sanatana surrendered its right to acquire the 51-per-cent interest and in any event no later than March 23, 2016.
Under the terms of the option and JV agreement, Sanatana has the right to be the manager of the joint venture when it is formed and will manage the work program(s) as directed by a management committee set up based on the parties' respective interests in the joint venture. Ultimately, if Sanatana acquires the 51-per-cent interest (and assuming that it does not dilute its interest in the joint venture), Sanatana will control the management committee and thereby control the instructions the management committee gives to the manager to establish programs.
Work costs
Prior to the formation of the joint venture which could, at Sanatana's election, be as late as March 23, 2016, Sanatana has elected to continue to spend work costs on the property. Under the terms of the option and JV agreement, Sanatana will continue to be credited for such work costs. Specifically, any work costs made or incurred by Sanatana in excess of the work costs required to earn its interest in the property will be credited to Sanatana's contribution to the first work program after formation of the joint venture and will not automatically dilute the participating interest of TAAC on formation. In addition to the $5-million in work costs that Sanatana has spent to acquire the 50-per-cent interest, Sanatana has to date expended further work costs of approximately $3-million on the property.
Area of interest
The property is protected by an area of interest extending at least one kilometre from any portion of the property (AOI) as it existed as of the date of the option and JV agreement. If a party to the option and JV agreement (or its affiliate) acquires any interest in mineral claims or any other form of mineral tenure located wholly or partly in the AOI, then such acquiring party must immediately notify the other party and provide the other party with details of the acquisition/staking costs associated therewith, and all details in its possession with respect to the nature of the AOI tenure and the known mineralization thereon. As noted above, the AOI is at least one kilometre but the exact size of the AOI was redacted in the copy of the option and JV agreement Sanatana filed on SEDAR.
Participation right
Pursuant to the option and JV agreement, TAAC has the right to purchase up to 10 per cent of any securities issued by Sanatana in a brokered or non-brokered private placement, provided that TAAC qualifies under an exemption provided by National Instrument 45-106. The participation right will terminate immediately upon the termination of the option and JV agreement or the formation of the joint venture. TAAC is prohibited from exercising the participation right if it (or any person or company acting jointly or in concert with TAAC) would beneficially own, or exercise control or direction over, 20 per cent or more of the total issued and outstanding voting securities of Sanatana, immediately after giving effect to such exercise.
The technical portions of this news release were reviewed and approved by Troy Gill, BSc, MAIG, exploration manager for the company, a qualified person as defined by National Instrument 43-101.
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