TSX Venture: GPL
CALGARY, Jan. 24 /CNW/ - General Properties Ltd. ("General Properties" or the "Corporation") announced today that it has entered into a non arms length letter of intent dated December 28, 2007 with CaNev Resources Corporation and Yarnell Mining Company, Inc. (the "Vendors") for an option to acquire a 70% working interest in the past producing Yarnell gold mine property (the "Property"), located 70 miles from Phoenix, Arizona.
The Vendors will retain a 30% carried interest in the Property. The letter of intent is subject to a number of conditions including approval of the TSX Venture Exchange, approval of the board of directors of General Properties and approval of General Properties' disinterested shareholders. Subject to all approvals, the Corporation anticipates closing the transaction in April 2008.
The Property consists of approximately 1,000 acres of patented and unpatented ground. The Property was last worked by BEMA Gold Corporation, who completed a feasibility study in 1998.
The letter of intent confirmed the following terms of the option:
The Corporation will pay to the vendor the sum of $174,695 USD as a refundable deposit and on receipt of conditional approval for the transaction and negotiation of definitive agreements, a further amount of $100,000 USD shall be paid. From this point forward, the Corporation will be responsible to pay all reasonable expenses of Yarnell incurred in connection with the Property as well as costs incurred to maintain the Property. General Properties shall also commission a technical report on the Property prepared in compliance with National Instrument 43-101 ("NI 43-101") and, provided the report discloses an historical geological gold resource of at least 250,000 ounces, General Properties will make a further payment of $432,305 USD.
On completion of a positive feasibility study, General Properties shall make a pre-production payment of $1,000,000 USD and upon receipt of all operating permits, licenses and approvals to commence construction of a mine, General Properties will make a pre-production payment to the Vendors of $1,000,000 USD and six months after commercial production is declared, General Properties shall pay to the Vendors a production bonus payment of $1,000,000 USD.
General Properties will also be required to pay an amount of $30,000 USD quarterly in arrears to fund local operations of the Property.
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 per oz. and a maximum rate of 4.00% above $800.00 per oz., a $660,000 payment when key permits are issued, and a post-production payment of $675,000 six months after commercial production has commenced.
The Vendors and Mr. Robert Knight, President of General Properties 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 when it shall be repaid by the Vendors from the proceeds of the transaction.
The acquisition of the Property is a related party transaction as certain directors of General Properties currently own the Property. The transaction is subject to the approval of the independent directors of General Properties following completion of a technical report prepared in accordance with NI 43-101 and due diligence. In the event the independent directors determine not to proceed with the transaction, then no deposit monies will be forfeited. The independent directors have had limited opportunity to conduct due diligence to date. The option price was established by negotiation between Mr. Robert Knight and the Vendors and will be reviewed by the independent directors as part of their consideration of the transaction. The transaction will be subject to Policy 5.9 of the TSX Venture Exchange and accordingly will require the approval of disinterested shareholders. General Properties is exempt from the requirement to obtain a formal valuation for the transaction as its securities are only listed on the TSX Venture Exchange.
Management of the Corporation believe that the acquisition of the Property presents an opportunity to further develop General Properties as an exploration and production company focused on precious and base metals.
The feasibility study referenced herein was not reported in present day NI 43-101 standards.
There can be no assurance that the Corporation will be able to obtain the required approvals to complete the transaction.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.