Gemdale Gold Inc. (TSXV:GEMG)(OTCQB:GDGIF) has announced a proposed transfer of WestGold Metals Corp.’s option over the Isoneva Gold Property in Finland to Jesmond Capital Ltd. WestGold, formerly known as Nordique Resources Inc., has entered into an option acquisition agreement under which it would assign its rights and interests in the option to Jesmond.
The proposed assignment is not yet complete. Closing depends on Jesmond completing its Qualifying Transaction and concurrent financing, along with receiving the required TSX Venture Exchange, regulatory and third-party approvals and acknowledgements.
Jesmond would assume WestGold’s obligations under the existing option agreement with Gemdale from closing. The original terms of that agreement would remain unchanged.
Gemdale will continue to own 100% of the Isoneva Gold Property until Jesmond completes the required earn-in terms and exercises the option. Gemdale will initially remain the operator, while exploration activities will be directed and funded by Jesmond in accordance with the underlying agreement.
The existing Isoneva option allows WestGold to earn a 100% interest by, among other requirements, funding exploration expenditures over a three-year period and making additional financial commitments to Gemdale. The proposed assignment would transfer that option to Jesmond, subject to the stated closing conditions.
Following closing, Jesmond would need to incur remaining aggregate exploration expenditures of C$2,400,000 before the option period expires on 25 June, 2028.
Before that date, Gemdale may elect to receive either C$1,000,000 in cash or C$4,000,000 worth of Jesmond common shares. The share consideration would be valued at the higher of the 20-day volume-weighted average trading price and the lowest price permitted by the applicable stock exchange. It would also be subject to a 19.99% ownership limitation, with a cash top-up required for any balance that could not be settled through the share issuance.
If Gemdale elects the C$1,000,000 cash payment, further contingent payments would become payable after Jesmond exercises the option. These would include C$500,000 following the announcement of an aggregate 500,000-ounce gold or gold-equivalent mineral resource on Isoneva in the measured or indicated categories.
A further C$1,000,000 would be payable following the announcement of an aggregate 1,000,000-ounce gold or gold-equivalent mineral resource in those categories. Another C$1,500,000 would be payable following the announcement of completion of a positive feasibility study for Isoneva.
The underlying agreement states that these contingent payments are not cumulative. It gives the example that an initial mineral resource exceeding 1,000,000 ounces would result in an aggregate cash payment of C$1,500,000.
If Jesmond meets the applicable consideration and exploration expenditure requirements and exercises the option, a 100% undivided interest in Isoneva would vest in Jesmond, subject to a 2.0% net smelter returns royalty in favour of Gemdale.
Jesmond would have a one-time right, exercisable when the option is exercised, to reduce the royalty from 2.0% to 1.5% by paying Gemdale C$2,000,000. Jesmond could also reduce the royalty to 1.0% by paying C$3,000,000, or to 0.5% if it had also exercised the C$2,000,000 royalty-reduction right.
Gemdale would be entitled to an operator’s fee equal to 10% of qualifying exploration expenditures. The fee would be reduced to 8% for the portion of qualifying exploration expenditures exceeding C$1,000,000 in a calendar year.
The transaction carries further terms under the underlying option agreement, including conditions and obligations not set out in full here.
WestGold has agreed to assign its option over the Isoneva Gold Property to Jesmond Capital.
Completion remains subject to Jesmond’s Qualifying Transaction, concurrent financing and required approvals and acknowledgements.
Following closing, Jesmond would need to fund C$2,400,000 in remaining exploration expenditures before 25 June, 2028.
Gemdale may elect C$1,000,000 in cash or C$4,000,000 in Jesmond shares, subject to the stated pricing, ownership limitation and cash top-up provisions.
Gemdale would retain ownership until exercise, remain operator initially and hold a 2.0% net smelter returns royalty if Jesmond earns the property.
Gemdale Gold Inc. (TSXV:GEMG)(OTCQB:GDGIF) announced that WestGold Metals Corp. has entered into an option acquisition agreement with Jesmond Capital Ltd. Under the proposed arrangement, WestGold has agreed to assign and transfer to Jesmond its rights and interests in the option to acquire a 100% interest in the Isoneva Gold Property in Finland. The assignment remains subject to conditions and has not been stated as completed.
Completion is subject to a number of conditions, including Jesmond's Qualifying Transaction and concurrent financing, as well as the required TSX Venture Exchange, regulatory and third-party approvals and acknowledgements. The source does not state whether these conditions have been satisfied.
The original terms of the option agreement between Gemdale and WestGold remain unchanged. Gemdale will continue to own 100% of the Isoneva Gold Property until Jesmond completes the earn-in terms and exercises its option. Gemdale will also continue to act as operator, with exploration activities directed and funded by Jesmond, subject to the Underlying Option Agreement.
Following closing, Jesmond will be required to incur remaining aggregate exploration expenditures of C$2,400,000 before the option period expires on 25 June, 2028. Before that expiry, at Gemdale's election, Jesmond must either pay Gemdale C$1,000,000 in cash or issue C$4,000,000 worth of Jesmond common shares, valued at the higher of the 20-day volume-weighted average trading price and the lowest price permitted by the applicable stock exchange. The share consideration is subject to a 19.99% ownership limitation and a cash top-up for any balance that cannot be satisfied through the issuance of shares.
If Gemdale elects to receive the C$1,000,000 cash payment, additional contingent payments will become payable following exercise of the option: C$500,000 following the announcement of an aggregate 500,000-ounce gold or gold-equivalent mineral resource in the measured or indicated categories; C$1,000,000 following the announcement of an aggregate 1,000,000-ounce resource in those categories; and C$1,500,000 following the announcement of the completion of a positive feasibility study. The source states that these contingent-payment amounts are not cumulative and gives the example that an initial mineral resource exceeding 1,000,000 ounces would result in an aggregate cash payment of C$1,500,000.
If Jesmond satisfies the applicable cash or share consideration and exploration expenditure requirements and exercises the option, a 100% undivided interest in the Isoneva Gold Property would vest in Jesmond, subject to a 2.0% net smelter returns royalty in favour of Gemdale. Jesmond would have a one-time right to reduce the royalty from 2.0% to 1.5% by paying Gemdale C$2,000,000. It would also have the right to reduce the royalty to 1.0% by paying Gemdale C$3,000,000, or to 0.5% if it has also exercised the C$2,000,000 royalty-reduction right.
Gemdale will initially act as operator of the Isoneva Gold Property and will undertake exploration activities directed and funded by Jesmond, subject to the Underlying Option Agreement. Gemdale will be entitled to an operator's fee equal to 10% of qualifying exploration expenditures, reduced to 8% for the portion of qualifying exploration expenditures exceeding C$1,000,000 in a calendar year. The source states that further terms apply under the Underlying Option Agreement.
The source identifies risks including failure to obtain required approvals, Jesmond or other counterparties not completing earn-in expenditures or financial commitments, availability and terms of financing, exploration and development risks, commodity price fluctuations, environmental and permitting risks, operational risks, mineral title and tenure risks, foreign-jurisdiction risks in Finland, potential dilution from future financings, securities-price volatility and the Company's early stage of development. It also states that forward-looking statements are subject to assumptions and uncertainties and that there can be no assurance that expected events will occur in the disclosed time frames or at all.