TORONTO, June 9 /CNW/ - Wesdome Gold Mines Ltd. ("Wesdome") and Windarra Minerals Ltd. ("Windarra") are pleased to announce that they have: (a) completed the sale to Wesdome of Windarra's interest, being approximately 22.72%, in the patented claims/leases referred to as the Magnacon Property (the "Magnacon Acquisition"); and (b) entered into an exploration and option agreement (the "Option Agreement") pursuant to which Wesdome has the exclusive right to conduct exploration within and the option (the "Pukaskwa Option") to earn up to a 60% undivided working interest in certain mining claims owned by Windarra and referred to as the Pukaskwa Claims. The terms of the Magnacon Acquisition and the Pukaskwa Option were announced by the parties on May 11, 2009.
Magnacon Acquisition --------------------
Following the Magnacon Acquisition, Wesdome owns 100% of the Magnacon Property, subject to a 1% net smelter royalty in favour of Windarra granted in connection with the acquisition. Windarra was also granted the right to have Wesdome mill up to a maximum of 50,000 metric tonnes of ore per year from properties currently owned by Windarra at a cost equal to the production cost of such milling plus $2.00 per tonne of ore milled. In addition, the joint venture agreement between Wesdome and Windarra dated March 3, 2000, which applied to the Magnacon Property and the East Property (as defined therein), now no longer applies to the Magnacon Property, but continues to apply to the East Property.
Pukaskwa Option ---------------
Under the Option Agreement, Wesdome has the right to earn up to a 60% undivided interest in the Pukaskwa Claims by expending or causing to be expended an aggregate of $3,000,000 in exploration and development expenses on the Pukaskwa Claims by certain dates over the period commencing on June 5, 2009 and continuing until June 30, 2014 (the "Option Period").
Upon making or causing to be made expenditures totalling $1,500,000, Wesdome shall have earned a 30% undivided working interest in the Pukaskwa Claims and upon making or causing to be made expenditures totalling $3,000,000, Wesdome shall have earned a further 30% interest in the Pukaskwa Claims such that Wesdome shall have earned an aggregate 60% interest in such claims. Provided that the Pukaskwa Option remains in good standing, Wesdome shall be the operator with respect thereto.
If Wesdome provides a withdrawal notice (the "Withdrawal Notice") to Windarra after earning the 30% interest or fails to earn the 60% interest in the Pukaskwa Claims, Windarra shall be entitled to dilute Wesdome's interest in the Pukaskwa Claims by making expenditures of its own related thereto. If Windarra makes expenditures on the Pukaskwa Claims, each $100,000 of expenditures made by Windarra, will reduce Wesdome's interest in the Pukaskwa Claims by 1%.
If Wesdome does not provide the Withdrawal Notice to Windarra, but fails to make any expenditures related to the Pukaskwa Claims prior to June 30, 2013, Windarra shall have the right to acquire the 30% interest in the Pukaskwa Claims from Wesdome for a purchase price of $200,000 at any time until the expiry of the Option Period.
Upon Wesdome earning-in the 60% interest, Wesdome and Windarra shall be deemed to have formed a joint venture and shall forthwith enter into a joint venture agreement, which agreement shall be similar to the Magnacon JV Agreement and shall include a provision stating that Wesdome has the exclusive right to process the ore arising from the Pukaskwa Claims at Wesdome's facility located on the Magnacon Property.
Wesdome is an established Canadian gold producer with wholly-owned mining and milling complexes located in Wawa, Ontario and Val d'Or, Quebec. Wesdome has been producing gold continually for 20 years on an unhedged basis and to date has produced in excess of 1.0 million ounces. The Company has 99.8 million shares issued and outstanding and trades on the Toronto Stock Exchange under the symbol "WDO".
Windarra Minerals Ltd. is an established Canadian exploration company. It has actively been involved in exploration and development projects in the Mishibishu Greenstone belt for 20 years, and holds a further 100% interest in the two Mishi mining leases consisting of approximately 705 hectares in the Mishibishu Lake township and a 25% interest in the Magnacon East property. It has 30.7 million shares outstanding and trades on the TSX Venture Exchange under the symbol "WRA".
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