The Agreement also provides for the potential formation of a joint venture company to progress development of the formerly producing Cehegin Iron Ore Mine located in the Province of Murcia, south-eastern Spain.
Under the terms of the Joint Venture Agreement ("the JVA"), Glencore would be granted a 20% interest in the Cehegin Project, with Solid retaining an 80% interest. The joint venture would progress exploration and phased development studies with the objective of identifying and constructing a new iron ore mine.
Greg Pendura, CEO of Solid Resources commented: "A strategic partnership with Glencore is a major step towards putting the Cehegin Project into production. Glencore gives Solid access to world renowned expertise in mining development, worldwide marketing and logistics. The strength of Glencore combined with the historical drilling and production data available on the Cehegin Iron Ore Mine will greatly facilitate the advancement of this project."
Significant terms of the potential JVA are:
Glencore to hold a 20% interest, with Solid maintaining an 80% interest.
Glencore to exclusively purchase all production.
Agreement to jointly pursue third party financing when required.
Dilution of non-financing partner(s) at fair market value.
In addition, upon execution of the Agreement, Solid has also issued to Glencore twelve million (12,000,000) purchase warrants to purchase an equivalent number of common shares in the capital of Solid, at an exercise price of $0.19 during the period from the date of issuance until October 18, 2014 and $0.26 during the period from October 19, 2014 until the expiry date of October 18, 2015.
The warrants will only vest and be exercisable as to 50% on the signing of the Agreement and as to 50% on Glencore contributing its share of costs for the initial exploration and study phase of the development programme. The warrants, and any common shares issuable on exercise, are subject to a hold period that expires on February 18, 2014.
