Through its wholly owned subsidiary, Remedios Gold S.A.S., Remedios Gold holds six mining concessions (collectively, the "Remedios Property"), covering a total area of 633 hectares, in the Remedios/Segovia mining district in Antioquia, Colombia, on which are located two existing mines and a processing plant with an installed capacity of 100 tons per day.
In connection with the execution of the Agreement, Wolverine paid Herbo $700,000 (the "Advance") as an initial deposit. Pursuant to the terms of the Agreement, Wolverine will have up to 60 days to complete its due diligence with respect to the Transaction.
Within five business days of giving notice to Herbo that it wishes to proceed with the Transaction (the "Due Diligence Satisfaction Date"), it will pay to Herbo, in addition to the Advance: (i) $500,000 on the date that is six months after the Due Diligence Satisfaction Date; and (ii) $500,000 on the date that is twelve months after the Due Diligence Satisfaction Date (collectively, the "Cash Consideration") for a total purchase price of $1,700,000.
Upon payment of the entire Cash Consideration, Wolverine will acquire 30% of the issued and outstanding shares of Remedios Gold. Wolverine will acquire an additional 50% interest in Remedios Holdings, for a total interest of 80%, if it incurs no less than $2,500,000 in work costs on the Remedios Property prior to the third anniversary of the Due Diligence Satisfaction Date.
As additional consideration, Herbo will be entitled to a 2.5% net smelter return royalty on all production from the Remedios Property. Wolverine will also be entitled to appoint directors to the board of Remedios Gold and its subsidiary in proportion to its share position, as provided for in the Agreement.
In the event that Wolverine is not satisfied with the results of its due diligence, and determines not to proceed with the Transaction, the Advance will be treated as a secured loan.
The loan will mature on the date that is six months following Wolverine’s determination not to proceed with the Transaction (subject to Wolverine’s right, in its sole discretion, to extend such maturity date by an additional six months), will bear interest at the rate of 10% per annum, and will be secured by 51% of the outstanding shares of Remedios Gold, which have been deposited into escrow with Wolverine’s Colombian counsel pursuant to the terms of a share pledge agreement among the parties for this purpose, and general security over 51% of the assets of Remedios Gold and its subsidiary.
Completion of the Transaction is subject to a number of conditions as provided for in the Agreement, including the approval of the TSX Venture Exchange and the completion of due diligence by Wolverine. A copy of the Agreement will be filed on SEDAR under the respective profiles of Wolverine and Tolima.
