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Eloro Resources and Megastar Development Announce Closing of $4 Million Joint Venture Agreement on Megastar's Simkar Gold Project
Eloro Resources and Megastar Development Announce Closing of $4 Million Joint Venture Agreement o...
About this update from Eloro Resources Ltd.
[{"type":"text","content":"\nEloro Resources and Megastar Development Announce Closing of $4 Million Joint Venture Agreement on Megastar's Simkar Gold Project\n\n\n Aug. 17, 2009 (Baystreet.ca) -- TORONTO, ONTARIO -- Eloro Resources Ltd. (TSX VENTURE: ELO)(FRANKFURT: P2Q) (\"Eloro\") and Megastar Development Corp. (TSX VENTURE: MDV)(FRANKFURT: M5Q) (\"Megastar\") are pleased to announce that they have executed a definitive agreement (the \"Agreement\") for a $4 million joint venture on Megastar's wholly-owned Simkar Gold Project (the \"Project\"), located approximately 20 km east of Val-d'Or (Quebec). The Project, a former gold producer, consists of two contiguous mining concessions in Louvicourt Township, covering 225.63 hectare. The Project is not encumbered with any royalties.\n\nThe Agreement provides Eloro with the option to earn a 50% undivided interest in the Project by completing $4 million in exploration work on the Project over a 3 year period, subject to a one-time six month extension at Eloro's option after the first year, whereby $750,000 would be incurred in the first year, $1.25 million in the second year and $2 million in the third year; paying Megastar $350,000 cash over a three year period, and issuing 4.5 million common shares of Eloro to Megastar as follows: (1) 750,000 common shares upon execution of a definitive option agreement (the \"Option Agreement\") and TSX Venture Exchange approval, (2) 750,000 common shares on the first year anniversary of the Option Agreement, (3) 1.5 million common shares on each the second and third anniversary of the Option Agreement. Should Eloro elect to utilize the six month extension on either the second or third year's exploration commitments, Eloro would issue an additional 100,000 common shares to Megastar. Eloro would be the project manager and operator. After Eloro completes its earn-in, Eloro and Megastar will form a joint venture reflective of their proportionate ownership interest in the Project with Eloro acting as operator. Should either Eloro or Megastar's participating interest in the Project be diluted to less than ten percent, the diluted party's interest will be converted to a 2% net smelter returns royalty. The non-diluted party can acquire one-half percent of the royalty from the diluted party for $1 million, thereby reducing the royalty from 2% to 1.5%. This transaction is subject to...