President & CEO, Mr. Corey Sandberg, recently returned from a due diligence trip to Peru during which he made a site visit to the Cambalache project. Upon review of the due diligence, further conversation with Corizona management in Peru and the current project owner, the partners agreed to make modifications to the original terms of the Letter of Intent to more appropriately align with the needs and potential of the project.
Affinity, Corizona and the current project owner of the Cambalache project (together the "project partners"), have agreed to establish a new legal entity under which the project, and all operational assets, will be transferred to and held free and clear without encumbrances. This entity is in the process of being finalized and assets transferred. Originally, the agreement between Corizona and project owner stipulated an earn-in of the existing entity where project is held.
Affinity and Corizona ("joint venture partners") have established a new legal entity called "Compania Minera RyCor, S.A.C." ("Rycor") in which Affinity holds an immediate and undivided 49.9% interest. Furthermore, RyCor will still have an option to purchase up to an additional 25% of the Cambalache project for up to three million dollars (USD $3,000,000) with an expiration of five years.
RyCor will be immediately granted a 50% ownership interest in the new legal entity where the project and operational assets are to be transferred and held. In addition, RyCor will elect the General Manager of this new legal entity.
In the Formal Agreement, Affinity commits to the following obligations in exchange for an immediate and undivided forty-nine percent (49.9%) interest in RyCor:
a total capital investment of USD $25,000 upon the following being completed:
Finalization of bank accounts for Compania Minera RyCor, S.A.C., ("RyCor"),
Finalization of new legal entity where Cambalache assets are to be transferred, held and owned,
Transfer of assets to new legal entity owned by the project partners.
$60,000 30 days from the execution of Formal Agreement and completion of assets and ownership interest legally transferred and recorded.
$85,000 within 60 days from the completion of assets and ownership interest legally transferred and recorded.
$85,000 within 90 days from the completion of assets and ownership interest legally transferred and recorded.
$545,000 over the course of 12 months following the execution of the Formal Agreement and completion of assets and ownership interest legally transferred and recorded.
Affinity will be granted an expedited payback of 70% of the income RyCor receives until its fully invested capital is recovered. Upon Affinity recovering its full investment, distributions will revert to 49.9%.
Under the Joint Venture agreement with Corizona, Affinity will be responsible for a total capital investment of USD$770,000 while Corizona subsequently responsible for USD$330,000, in order for the Joint Venture partners to earn an undivided fifty percent (50%) equity interest in the Cambalache project.
