CALGARY, July 18 /CNW/ - General Properties Ltd. (TSX Venture Exchange: GPL) (the "Corporation") is pleased to announce that it has entered into a non-arms length Joint Venture Agreement (the "JV Agreement") with CaNev Resources Corporation and Yarnell Mining Company, Inc. (the "Vendors") representing the definitive agreement setting forth the Corporation's option to acquire a 70% working interest in the past producing Yarnell gold mine property (the "Transaction"). Consideration payable by the Corporation pursuant to the JV Agreement consists of payments at specific time periods and upon the occurrence of certain events, equalling an aggregate of $3,744,345 USD plus expenses relating to, among other things, all operating expenses incurred from January 1, 2008 and funds required to complete a feasibility study.
The Corporation is also pleased to announce that the TSX Venture Exchange has cleared for mailing the Corporation's management information circular for an annual and special meeting (the "Meeting") of the shareholders of the Corporation to be held on August 25, 2008. Among other things, at the Meeting the shareholders of the Corporation will be asked to consider a resolution approving the Transaction, which resolution will require "minority approval" of the shareholders of the Corporation as described below.
The Yarnell gold mine property (the "Property") consists of 5 patented lode claims and 48 unpatented lode claims covering approximately 900 acres and is located in the Weaver Mountains of Yavapai County in the state of Arizona. The Property was last worked by BEMA Gold Corporation, who completed a feasibility study in 1998 (which feasibility study was not reported in present day National Instrument 43-101 - Standards of Disclosure for Mineral Projects standards). As per the Corporation's June 6, 2008 press release, the Corporation has filed on the System for Electronic Document Analysis and Retrieval (www.sedar.com), a National Instrument 43-101 - Standards of Disclosure for Mineral Projects report in respect of the Property. Pursuant to the Transaction, the Vendors will retain a 30% carried interest in the Property.
The Transaction is a related party transaction as certain directors of the Corporation currently own the Property. Management of the Corporation believes that Transaction presents an opportunity to further develop the Corporation as an exploration and production company focused on precious and base metals.
Completion of the Transaction is subject to compliance with the terms and conditions set forth in the JV Agreement, which includes but is not limited to requisite "minority approval" (as described below) and regulatory approval, including final approval of the TSX Venture Exchange.
The JV Agreement confirms the following terms of the Corporation's option to acquire a 70% working interest in the Property:
(a) the Corporation will pay to the Vendors the sum of $174,695 USD as
an initial refundable deposit (which the Corporation has paid).
Within 60 days of receipt of conditional approval by the
TSX Venture Exchange, a further amount of $100,000 USD shall be
paid by the Corporation to the Vendors;
(b) within two (2) business days of receipt of final approval of the
TSX Venture Exchange, the Corporation shall make a payment of
$469,650 USD, plus all operating expenses as incurred by the
Vendors from January 1, 2008, to the Vendors as a further payment
for entering into the JV Agreement; and
(c) on completion of a positive feasibility study, the Corporation
shall make a pre-production payment of $1,000,000 USD to the
Vendors;
(d) within 60 business days of receipt of all operating permits,
licenses and approvals to commence construction of a mine, the
Corporation will make a pre-production payment to the Vendors of
$1,000,000 USD; and
(e) within 6 months after commercial production is declared, the
Corporation shall pay to the Vendors a production bonus payment of
$1,000,000 USD.
In addition, the Corporation will be responsible for payment of all outstanding fees under the original agreement between the Vendors and BEMA Gold Corporation including a sliding scale net smelter royalty with a minimum rate of 1.5% under $400.00 USD per oz. and a maximum rate of 4.00% above $800.00 USD per oz., a $660,000 USD payment when key permits are issued, and a post-production payment of $675,000 USD six months after commercial production has commenced.
The Vendors and Mr. Robert Knight, President of the Corporation have also agreed to extend the term of a debt owed to a company controlled by Mr. Knight in the amount of approximately $115,000 Cdn to closing of the Transaction contemplated by the JV Agreement when it shall be repaid by the Vendors from the proceeds of the Transaction.
The Transaction is subject to Policy 5.9 - Protection of Minority Security Holders in Special Transactions of the TSX Venture Exchange and accordingly will require "minority approval" of the shareholders of the Corporation as set forth in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. The Corporation is exempt from the requirement to obtain a formal valuation for the Transaction as its securities are only listed on the TSX Venture Exchange.
As a result of the execution of the JV Agreement and the TSX Venture Exchange's clearance for mailing of the Corporation's management information circular, the Corporation is required to pay the Vendor's $100,000 USD within the next 60 days.
The Corporation is a mining exploration and development company with holdings in northern Alberta, Canada. Information about the Corporation can be found at www.sedar.com.
The TSX Venture Exchange has in no way passed on the merits of the Transaction and has neither approved nor disapproved the contents of the press release. There can be no assurance that the Transaction will be completed as proposed or at all. Trading in the securities of the Corporation should be considered highly speculative.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this press release.