African Metals Corporation and Frederick Private Equity Corporation Sign Agreement on the Silver Bell - St. Lawrence Gold Project, Montana
African Metals Corporation
African Metals Corporation and Frederick
Private Equity Corporation Sign Agreement
on the Silver Bell - St. Lawrence Gold
Project, Montana
Friday, April 26, 2019 2:55 PM
TORONTO, ON / ACCESSWIRE / April 26, 2019 / African Metals Corporation (the
"Company") [TSXV: AFR.H [formerly AFR)] is pleased to announce that it has entered into
an agreement whereby the Company may acquire a majority interest in the Silver Bell - St.
Lawrence Gold Project, in the Virginia City Mining District of Montana, U.S.A. from Frederick
Private Equity Corporation ("Frederick PEC"). Under the Agreement, the Company may initially
earn a 51% interest in the Project by making annual US$10,000 option payments and spending
US$1,000,000 in exploration expenditures within four years with a minimum of $200,000 in
expenditures during the first year. The Project comprises a 390-acre claim package located about
4 miles southwest of Virginia City in Madison County, Montana, and about 50 miles southeast of
Butte, Montana. There is also an area of interest around the Project.
The Project hosts two past producing gold-silver mines, the Silver Bell Mine on the west and the
St. Lawrence Mine on the east. Both mines operated in the early 1900s and the St. Lawrence was
reactivated and operated in the early 1980s. Historical production records are incomplete but
available information suggests that historical production at the St. Lawrence was approximately
0.22 ounces per ton ("opt") gold and 3.8 opt silver. Smelter receipts for small shipments from the
St. Lawrence indicate that some ore with much higher grades was shipped. For example, a
smelter receipt from October 30, 1964 states that 8.027 tons were received grading 0.76 opt gold
and 20.0 opt silver. Historical production at the Silver Bell averaged approximately 0.2 opt gold
and 15.1 opt silver.
The shafts for each of the former mines are located 3,600 feet apart and the exploration
hypothesis is that the two mines shared mineralized systems that may in part be contiguous.
Surface mapping and geophysical surveying by the Company support this initial hypothesis and
may indicate extension of the vein system farther east along strike from the St. Lawrence mine.
The Company announced on January 3, 2019 that it had completed the sale of all or substantially
all of its assets as approved by special resolution of its shareholders and that it was in the process
of settling all of its debts and liabilities which were in existence at the time that the current
management and the majority of the Board of Directors consisting of John O'Donnell and David
Mason took office. The Company also indicated its intention to use the sale proceeds to reinstate
the Company's corporate standing, bring its books and records back to good order, hold an
annual general meeting of Shareholders and complete all necessary steps to apply to have the
current cease trade order dated December 1, 2016 revoked. The Company further indicated that
once its debts are settled, the Company plans to use the remaining sale proceeds, which are
expected to be approximately US$1,600,000, to seek out further business opportunities. The
completion of the audited financial statements is well underway and is expected to be completed
in May. The Project puts the Company back in business and is believed to be an exciting, low
cost, drill-ready project. A modest drill program will hopefully give an early indication of the
validity of the geological hypothesis.
Frederick PEC acquired its interest in the Project from Peloton Minerals Corporation ("Peloton")
(CSE Symbol: PMC) (OTCQB Symbol: PMCFF) through Peloton's wholly owned subsidiary
SBSL Subsidiary Corporation ("SBSL") pursuant to an Exploration Agreement with a joint
Venture Option (the "Peloton-Frederick Agreement"). Under the Peloton-Frederick Agreement,
Frederick PEC may earn up to a 75% interest in the Project by spending a total of US$2,000,000
in exploration expenditures within six years and make annual option payments.
Frederick PEC may first earn a 51% interest in the Project by making annual US$10,000 option
payments to SBSL and spending US$1,000,000 in exploration expenditures within four years
with a minimum of $200,000 in expenditure during the first two years. Frederick PEC may earn
a further 24% interest (the "Second Earn-In Option") in the Project by then making annual
US$25,000 option payments and spending an additional US$1,000,000 in exploration
expenditures over a two-year period following the establishment of the first 51% interest, for a
total of US$2,000,000 to earn a 75% interest. After Frederick PEC has earned either a 51% or a
75% interest, as the case may be, a mining venture or mining company may be formed with
respect to the Project, and Frederick PEC and Peloton will contribute their respective share of
further exploration and development expenditures. In the event that either party's interest is
diluted to ten percent (10.0%) or less, it shall relinquish its interest to the other party, in return
for a royalty agreement that conveys to the diluting party a royalty of one percent (1.0%) of net
smelter returns on all minerals thereafter produced and removed from the Project. The non-
diluting party may, at any time, buy-down that royalty by one-half percent (0.05%), so that the
total royalty is one-half percent (0.05%) of net smelter returns, by paying US$250,000 to the
royalty holder. The Project is subject to an earlier outstanding 2% NSR, the majority of which
can be bought down to one percent (1%), and a buy down option on the remaining claims is
being sought.
In order to earn its 51% interest, the Company must make all of the exploration expenditures and
annual option payments required to be made to SBSL to exercise its option to earn a 51% interest
in the Project and has agreed to expend the minimum exploration expenditures to be made
($200,000) within one year of the execution of this Agreement.
Frederick PEC retains the right to earn the additional 24% Second Earn-In Option if it chooses to
do so. If it elects not to earn the Second Earn-In Option, it shall transfer and assign the right to do
so to the Company upon payment to Frederick PEC of 1,000,000 fully paid and non-assessable
common share of the Company or an Affiliate company into which the rights under this
Agreement may have been further transferred or assigned by the Company, subject to all
regulatory and stock exchange requirements. To be clear, this provision shall not apply unless the
Company is successful in having its current cease trading order lifted, otherwise this provision
shall be null and void with no force and effect. In such event, the Company will be responsible
for funding all additional exploration expenditures and option payments required to earn the
Second Earn-In Option. If Frederick PEC elects to earn the Second Earn-In Option, it shall make
the necessary exploration expenditures and option payments required to earn the Second Earn-In
Option, provided however that the Company will be responsible for paying its proportionate
share of such exploration expenditures and option payments equal to a ratio of 51 to 24 reflecting
the respective proportionate interests of the parties in the Property. In the event that the Company
does not contribute its proportionate share of such exploration expenditures and option payments
and Frederick PEC has earned the Second Earn-In Option, the interest of the Company shall be
diluted to 24% and the interest of Frederick PEC shall be increased to 51%.
If Frederick PEC completes an initial offering of its securities to raise funds to cover its
activities, it shall offer at least half of such securities to the shareholders of AFR in proportion to
their shareholdings in AFR with or without a back stop or standby purchaser agreement. Such
right is limited to the first offering of securities by Frederick.
John O'Donnell is an officer and/or director of Peloton, Frederick PEC, and the Company and, as
such, recused himself from the approval process of the transactions.
John Childs, PhD, is the qualified person responsible for approving the technical information
contained within this release.
Company Contact:
Daniel Gregory, Chief Financial Officer
Office: (416) 709-9266
E-mail: [email protected]
Neither the TSX Venture Exchange nor its Regulatory Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy
or accuracy of this press release.
This news release contains "forward-looking information" (within the meaning of applicable
Canadian securities laws) and "forward-looking statements" (within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995). Such statements or information are identified
with words such as "anticipate", "believe", "expect", "plan", "intend", "potential", "estimate",
"propose", "project", "outlook", "foresee" or similar words suggesting future outcomes or
statements regarding an outlook.
Such statements include, among others, those concerning the Company's plans to reactivate the
Company and for exploration activity, and to conduct future exploration programs. Such
forward-looking information or statements are based on a number of risks, uncertainties and
assumptions which may cause actual results or other expectations to differ materially from those
anticipated and which may prove to be incorrect. Assumptions have been made regarding,
among other things, management's expectations regarding its ability to initiate and complete
future exploration work as expected. Actual results could differ materially due to a number of
factors, including, without limitation, operational risks in the completion of the Company's
future exploration work, technical, safety or regulatory issues.
Although the Company believes that the expectations reflected in the forward-looking
information or statements are reasonable, prospective investors in the Company's securities
should not place undue reliance on forward-looking statements because the Company can
provide no assurance that such expectations will prove to be correct. Forward-looking
information and statements contained in this news release are as of the date of this news release
and the Company assumes no obligation to update or revise this forward-looking information
and statements except as required by law.
SOURCE: African Metals Corporation