Option Agreement FOR Mohave GOLD Project, Private Placement, New Principals and Qualifying Transaction
HUFFINGTON CAPITAL CORP.
Suite 1740 - 1177 West Hastings Street
Vancouver, BC V6E 2K3
Tel: 604 288-8906
June 10, 2020
OPTION AGREEMENT FOR MOHAVE GOLD PROJECT, PRIVATE PLACEMENT,
NEW PRINCIPALS AND
QUALIFYING TRANSACTION
Huffington Capital Corp. (TSX-V: HU.H) (the "Company") is pleased to announce that it has
entered into a non-binding Letter of Intent effective June 9, 2020 with ML Nevada Corp. ("M3
Metals Nevada"), a wholly owned Nevada incorporated subsidiary of M3 Metals Corp. ("M3
Metals"), a TSX Venture Exchange listed company.
Under the terms of the Letter of Intent, M3 Metals would, through M3 Metals Nevada, grant to
the Company an option (the "Option") under the terms of a mineral property option agreement to
be drafted and executed (the "Option Agreement") to acquire up to a 90% interest in a mineral
property option and purchase agreement (the "Underlying Agreement") under which M3 Metals
has the right and option to acquire up to a 100% right, title and interest in and to certain mineral
properties (the "Mohave Project") in Arizona.
The Company has also agreed to engage in a private placement (the "Private Placement") for
gross proceeds of $800,000.
In addition, the Company is anticipating three persons (the "New Principals") will join the
Company as directors and officers upon, and conditional upon, closing of the Option Agreement
and the Private Placement. The Option Agreement, Private Placement and appointment of the
New Principals are referred to in this news release, collectively, as the "Transaction".
The Company was originally listed as a CPC. The Transaction constitutes its Qualifying
Transaction.
Closing (the "Closing") of the transactions comprising the Transaction, including the Option
Agreement, the Private Placement and the appointment of the New Principals, are anticipated to
occur concurrently. Upon Closing, it is anticipated that the Company will be a Tier II mining
issuer on the TSX Venture Exchange (the "Exchange").
THE OPTION AGREEMENT
The Letter of Intent provides that the Company will be able to, under the terms of the Option
Agreement, earn up to a 90% interest in and to the interest of M3 Metals Nevada in and to the
Underlying Agreement by which M3 Metals Nevada could purchase the Mohave Project.
Under the terms of the Option Agreement, the Company, through a wholly owned Nevada
subsidiary, is expected to assume all cash payments and Underlying Exploration Expenditures
obligations in the Underlying Agreement.
In addition, the Company must make the following cash payments to M3 Metals and / or M3
Metals Nevada and must make the following exploration expenditures on the Mohave Project:
To the second anniversary of the Option Agreement (70% interest):
-CDN$300,000 upon closing of the Option Agreement;
-CDN$400,000 on the fifteen month anniversary of the Option Agreement; and
-CDN$400,000 on the second anniversary of the Option Agreement.
(collectively, the "Initial Option Agreement Payments")
Upon having made the Initial Option Agreement Payments and on the condition that the
Company has kept the Underlying Agreement in good standing by making the Underlying
Exploration Expenditures required in the Underlying Agreement, the Company will have earned
a 70% interest in M3 Metals Nevada's right, title and interest in the Underlying Agreement.
To the third anniversary of the Option Agreement (additional 10% interest)
To earn an additional 10% interest, the Company must make the following payment and
exploration expenditures:
-CDN$2 Million payment (payable to M3 Metals in cash or up to 50% in Company shares (as
those shares are valued at the time of issuance) at the Company's option) on or before the third
anniversary of the Option Agreement; and
-A minimum of CDN$1 Million in exploration expenditures on the Mohave Project including
Underlying Exploration Expenditures made by the Company pursuant to the Underlying
Agreement.
Upon having made the payment and expenditures above and on the condition that the Company
has kept the Underlying Agreement in good standing by making the Underlying Exploration
Expenditures required in the Underlying Agreement the Company will have earned an additional
10% interest (for a total 80%) in M3 Metals Nevada's right, title and interest in the Underlying
Agreement.
To the fourth anniversary of the Option Agreement (additional 10% interest)
To earn an additional 10% interest, the Company must make the following payment and
exploration expenditures:
-CDN$3 Million payment (payable to M3 Metals in cash or up to 50% in Company shares (as
those shares are valued at the time of issuance) at the Company's option) on or before the fourth
anniversary of Option Agreement; and
-A minimum of CDN$2 Million in additional exploration expenditures (for CDN$3million
aggregate exploration expenditures) on the Mohave Project including Underlying Exploration
Expenditures made by the Company pursuant to the Underlying Agreement.
Upon having made the payment and expenditures above and on the condition that the Company
has kept the Underlying Agreement in good standing by making the Underlying Exploration
Expenditures required in the Underlying Agreement the Company will have earned an additional
10% interest (for a total 90%) in M3 Metals Nevada's right, title and interest in the Underlying
Agreement.
The Company's interest at any time in the Underlying Agreement will be forfeited back to M3
Metals Nevada if: (i) the Company fails to make the cash payments or Underlying Exploration
Expenditures required under the Underlying Agreement; or (ii) the Company advises M3 Metals
it wishes to abandon the Mohave Project.
M3 Metals Nevada will retain a 10% interest in the Underlying Agreement (and through it, to the
Mohave Project).
The remaining 10% interest will be carried until the time in which a feasibility study (the "FS”)
is delivered, at which point M3 Metals Nevada and Huffington through its subsidiary will enter
into a joint venture arrangement. The FS must be done to at least that of a feasibility study as
defined in CIM definition standards.
The Company, under the terms and conditions of the Option Agreement will act as operator on
the Mohave Project.
Closing of the Option Agreement will occur with payment of the CDN$300,000 to M3 Metals,
receipt of written consent of the Vendors (as defined in "Terms of the Underlying Agreement"
below) to the Option Agreement and regulatory approval.
THE UNDERLYING AGREEMENT
The Underlying Agreement dated effective September 21, 2019 between M3 Metals Nevada and
two vendors, DDS Resources LLC (an Arizona limited liability corporation) and Mohave Mine
Partnership LLC (an Arizona limited liability corporation) (the two vendors being, collectively,
the "Vendors") grants M3 Metals Nevada the option (the "Underlying Option") to acquire a
100% right, title and interest in and to the Mohave Project from the Vendors.
The Underlying Option can be exercised by making the following remaining cash payments to
the Vendors and the following remaining exploration expenditures (the "Underlying Exploration
Expenditures") on the Mohave Project:
For the following: "Payment Commencement Date" means the earlier of: (i) the receipt of BLM
approval of further permits to conduct work on the Mohave Project; and (ii) March 21, 2021.
The Payment Commencement Date cannot be before September 21, 2020 under the terms of the
Underlying Agreement.
Cash Payments:
The first cash payment due under the Underlying Agreement has been paid to the Vendors. The
remaining cash payments are:
-On or before that day which is ten (10) days after the Payment Commencement Date, the sum of
USD$75,000 (the "Second Payment");
-On or before that day which is ten (10) days after the first anniversary of the Payment
Commencement Date, the sum of USD$100,000 (the "Third Payment");
-On or before that day which is ten (10) days after the second anniversary date of the Payment
Commencement Date, the sum of USD$150,000 (the "Fourth Payment");
-On or before that day which is ten (10) days after the third anniversary date of the Payment
Commencement Date, the sum of USD$200,000 (the "Fifth Payment"); and
-On or before that day which is ten (10) days after the fourth anniversary date of the Payment
Commencement Date, the sum of USD$3,000,000 (the "Final Payment").
Underlying Exploration Expenditures:
The following Underlying Exploration Expenditures remain to be made under the terms of the
Underlying Agreement:
-USD$200,000 in additional Underlying Exploration Expenditures after the Payment
Commencement Date but on or before the date of the Third Payment;
-USD$300,000 in additional Underlying Exploration Expenditures after the date of the Third
Payment but on or before the date of the Fourth Payment;
-USD$350,000 in additional Underlying Exploration Expenditures (for total aggregate
Underlying Exploration Expenditures of $900,000) after the date of the Fourth Payment but on
or before the date of the Fifth Payment; and
-USD$400,000 in additional Underlying Exploration Expenditures (for total aggregate
Underlying Exploration Expenditures of $1,300,000) after the date of the Fifth Payment but on
or before the date of the Final Payment.
Upon exercise of the Underlying Option, the Vendors retain a 1.5% net smelter royalty in the
Mohave Project.
No Non-Arm's Length Parties (as that term is defined in the policies of the Exchange) of the
Company or New Principals: (i) has a direct or indirect interest in the Mohave Project or in M3
Metals; or (ii) is an insider of M3 Metals. The Transaction does not constitute a Non-Arm's
Length Qualifying Transaction (as that term is defined in the policies of the Exchange). The
Company is at Arm's Length to M3 Metals Corp.
As a result, the Company anticipates filing a CPC Filing Statement in connection with obtaining
Exchange approval of the Transaction in lieu of a CPC Information Circular.
THE MOHAVE PROJECT
The Mohave Project is comprised of a total of 160 claims including lode claims and mill-site
claims within Mohave County, Arizona, USA.
The Mohave Project is host to high-grade and widesp read anomalous gold in soil geochemistry
over an area of approximately 10 square kilometres. The geochemistry indicates that the numerous
historic gold mines within this 10 square kilometres area may be part of one hydrothermal system.
The high-grade gold occurs in association with quartz-calcite veins, breccia, quartz and/or calcite
sheeted veins, and stockworking. Samples ranged up to 41.77 gpt (grams per tonne) over 3 meters
including 78 gpt (grams per tonne) gold over 1.5 me tres from surface chip sampling (see M3
Metals Corp. new release dated May 5, 2020 for furt her disclosure and information). At many of
the sites sampled only a portion of the mineralized package were sampled and require additional
sampling to determine their full extent.
The current geological model at the Mohave Project indicates that an epithermal gold system was
emplaced into an evolving volcanic/intrusive complex within a north-trending corridor undergoing
extreme extension. These unique circumstances provided fluid pathways for the gold bearing fluids
to fill of which many remain predominantly untested by drilling.
Historically there have been more than 550 historic drill holes totaling approximately 68,000 feet
drilled within limited areas of the Mohave Project. Most of these holes were shallow, 100 foot-
deep, air-track holes, many of which stopped in min eralization. Most of the work was done by
private companies in the 1980’s and 1990’s who spen t approximately USD$12 million installing
infrastructure to mine the shallow mineralization at surface.
Previous development work includes blasting of an initial bench at the historic Klondyke Mine
contained within the Mohave Project representing the beginning of open-pit style operations. The
blasted material remains stockpiled next to the primary jaw crusher located at the 350 tonne-per-
hour crushing facility that remains on the Mohave Project’s mill-site claims where heap-leach
infrastructure including a heap-leach pad, buildings, a jaw crusher, two cone crushers and a
conveyor system were installed and which remain in good condition.
The Company is currently preparing an independent NI 43-101 Technical Report on the Mohave
Project (the "Report").
The Report will contain additional detail on the history and nature of business previously
conducted on the Mohave Project and any available financial information regarding it.
THE PRIVATE PLACEMENT
The Company is engaging in the concurrent Private Placement of 10,000,000 units (the "Units")
at $0.08 per Unit with each Unit comprised of one common share and one common share
purchase warrant exercisable at $0.12 for a period of one (1) year from the date of issue.
Proceeds of the Private Placement will be used to fund work on the Mohave Project, obligations
under the Agreement and general working capital requirements of the Company.
A portion of the Units, namely those held by the New Principals, may upon issuance be subject
to the Exchange's three year Tier II escrow agreement if the New Principals purchase in excess
of 25% of the Private Placement Units.
NEW PRINCIPALS UPON CLOSING
The existing Directors and Officers of the Company are anticipated to resign upon Closing save
and except that the current President and CEO, Robert Meister, will assume the role of CFO. Their
places will be assumed by the following persons as Directors and Officers:
Graham Harris
It is anticipated that Graham Harris will be appointed Director, President and CEO of the
Company upon Closing. He will replace Robert Meister who currently holds those positions.
Mr. Harris has over 40 years’ experience in the finance industry, including as a senior VP of
Canaccord Genuity Corp. (1999-2004) and as a senior VP and partner of Yorkton Securities
(1989-1999). He has directly raised over 400 million in development and venture capital for
public and private companies. He was a founder of Cap-Ex Iron Ore Ltd., a founding director of
M2 Cobalt Corp- recently merged with ASX listed Jervois Mining Ltd. and is the founder of
Millennial Lithium Corp. Mr. Harris currently serves as Chair and a Director of Millennial
Lithium Corp. Mr. Harris holds a BA Econ from the University of British Columbia.
Dr. Peter J. MacLean
It is anticipated that Peter MacLean will be appointed Director of the Company upon Closing.
Dr. MacLean has over 25 years of exploration and development experience in North America,
South America and Africa. Currently Dr. MacLean is SVP, Technical Services for Millennial
Lithium Corp. and involved in all aspects of Millennial’s lithium brine project in
Argentina. Previously Dr. MacLean was SVP, Exploration, for Allana Potash Corp., and
directed all exploration and development activities on its Danakhil potash project in
Ethiopia. Dr. MacLean has also worked extensively on base metal and precious metal projects
throughout the Americas with Aur Resources, Monarch Resources, Newmont Gold, and Hecla
Mining and is fluent in Spanish. Dr. MacLean holds a PhD in Geology from the University of
Western Ontario and is a professional geologist (PGeo).
Farhad Abasov
It is anticipated that Mr. Abasov will be appointed Director and Chair of the Company upon
Closing.
Mr. Abasov has over 15 years of experience founding and managing natural resource companies.
He is the Chair of Automotive Finance Corp . Most recently, Mr. Abasov served as President &
CEO of Allana Potash Corp., a potash development co mpany which was sold to Israel Chemical
Ltd. for $170M in 2015. Mr. Abasov was also the Executive Chair of Rodinia Lithium, a company
developing lithium brine assets in Argentina, and w as a co-founder of Potash One which was
acquired by German potash company K+S for $430M in 2010. Prior to Potash One, Mr. Abasov
was Senior Vice President, Strategy at Energy Metal s which was acquired by Uranium One for
$1.8B in 2007. Mr. Abasov has an MBA from Internati onal University of Japan. He is currently
President and CEO of Millennial Lithium Corp., a Tier I TSX Issuer.
CLOSING AND REGULATORY APPROVAL
The Closing of the Transaction is subject to the receipt of regulatory approval from the Exchange
including approval of the Private Placement, the Agreement and review of the suitability of the
New Principals.
The Company must, prior to receipt of regulatory approval, submit the Technical Report to the
Exchange together with a CPC Filing Statement. Both documents will, once finalized, be filed
on the SEDAR system under the Company's issuer profile.
The Company anticipates applying for a waiver of the Exchange's sponsorship requirements.
There are a number of conditions on Closing in addition to regulatory approval from the
Exchange including receipt of the written consent of the Vendors and the Company providing
evidence to the Exchange that it will meet Tier II CLR upon Closing.
No finder's fees, commissions or other similar fees are payable in connection with the Closing of
the Transaction or any component of it including the Private Placement.
Upon Closing, the Company would commence trading on Tier II of the Exchange as a mining
issuer.
Dr. Peter J. MacLean, Ph.D., P. Geo., has acted as the Company’s Qualified Person in reviewing
and approving the technical information presented in this news release.
On behalf of the Board of Directors
"Robert Meister"
Robert Meister,
Director, President and CEO
Completion of the Transaction is subject to a number of conditions including, but not limited to, Exchange
acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval.
Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be
no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the
Transaction, any information released or received with respect to the Transaction may not be accurate or complete
and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither
approved nor disapproved of the contents of this news release.
This news release may contain certain “Forward-Looking Statements” within the meaning of the United States Private Securities Litigation Reform
Act of 1995 and applicable Canadian securities laws. When or if used in this news release, the words “anticipate”, “believe”, “estimate”, “expect”,
“target, “plan”, “forecast”, “may”, “schedule” and similar words or expressions identify forward-looki ng statements or information. These
forward-looking statements or information may relat e to future prices of commodities in particular of gold, accuracy of mineral or resource
exploration activity, reserves or resources, regula tory or government requirements or approvals, the r eliability of third party information,
continued access to mineral properties or infrastructure, currency risks including the exchange rate of US$ for CDN$, changes in exploration costs
and government royalties or taxes in Canada, the United States, Arizona or other jurisdictions and other factors or information. Such statements
represent the Company’s current views with respect to future events and are necessarily based upon a number of assumptions and estimates that,
while considered reasonable by the Company, are inh erently subject to significant business, economic, competitive, political and social risks,
contingencies and uncertainties. Many factors, both known and unknown, could cause results, performanc e or achievements to be materially
different from the results, performance or achievem ents that are or may be expressed or implied by suc h forward-looking statements. The
Company does not intend, and does not assume any obligation, to update these forward-looking statements or information to reflect changes in
assumptions or changes in circumstances or any othe r events affections such statements and information other than as required by applicable
laws, rules and regulations.