Arctic Star Exploration Corp. (“Arctic”), is pleased to announce the signing of an assignment agreement dated February 28, 2013 (the “Agreement”) with Equitorial Capital Corp. (“Equitorial”), a capital pool company pursuant to Policy 2.4 of the TSX Venture Exchange (the “Exchange”), whereby Equitorial can earn up to 60% of Arctic’s interest in and to the mineral concession located in Dabeiba, Antioquia Colombia, known as the El Havila copper-gold property (the “Property”). The Agreement is intended to serve as Equitorial’s “Qualifying Transaction” under the policies of the Exchange.
El Havila Copper-Gold Property
The Property is located thirty two kilometers East North East of Frontino in Colombia, South America and lies within the prolific Cavca gold belt, a highly prospective area with potential for porphyry-related gold and copper and epithermal precious metal deposits. The Property is hosted within the Santa Cecillia- La Equis volcanic complex in the western slope of the Colombian Western Cordillera mountain range. The area is being explored by numerous companies including AngloGold Ashanti (La Colosa), Gran Colombia (Marmato) and Continental Gold (Buritica).
Since acquiring the earn-in option on the El Havila Property, Arctic has completed exploration during 2012, that initially consisted of reconnaissance geological mapping and sampling, the results of which have previously been reported.
Terms of the Agreement
Assignment of 60% interest
By a property option agreement dated January 23, 2012 as amended (the “Option Agreement”) between Arctic and the vendor Patiño Gutierrez Javier De Jesus of Medellin, Colombia, Arctic has the option to acquire an 85% interest (50% interest acquired to date) in the El Havila Property by making total cash payments of US $325,000 to the vendor as follows:
Option Payment Schedule:
- US $200,000 due on February 15, 2013 (paid)
- US $125,000 on or before February 15, 2014 (optional).
Once Arctic has earned an 85% interest in the Property, Arctic will have the right and option to increase its 85% interest to 95% by delivering to the vendor 15,246.69 ounces of troy gold (at least 99.9% pure).
The Agreement provides that Arctic will assign to Equitorial a 60% interest in Arctic’s earned 50% interest in the El Havila Property and a 60% interest in Arctic’s rights and interests under the Option Agreement by reimbursing Arctic for the US $200,000 payment made by Arctic on February 15, 2013 and by assuming Arctic’s obligations under the Option Agreement, including making the final US $125,000 option payment to the vendor on or before February 15, 2014.
Upon making the two cash payments outlined above, Equitorial will earn its interest, which equates to a 51% interest in the Property. Equitorial, Arctic and the vendor will then enter into a joint venture to further explore and develop the Property. Equitorial does not have the option to increase its interest past 60% of Arctic’s initial 85% interest (or 51% effective interest in the Property).
Equitorial will be the operator of all exploration programs on the El Havila Property following closing.
All information contained in this news release with respect to Arctic and the El Havila Property was supplied by management of Arctic.
Loan to Arctic
By a separate loan agreement, Equitorial has agreed, subject to Exchange acceptance, to advance US $200,000 as a loan to Arctic, to reimburse Arctic for the payment of US $200,000 Arctic made to the vendor on February 15, 2013. Arctic will deliver Equitorial a promissory note and the loan and note will accrue interest at the prime rate posted by the Royal Bank of Canada plus 1% per annum. The loan will become due and repayable by Arctic within 90 days of the date of the loan agreement and the note (the “Due Date”). If the qualifying transaction is completed, the loan will be forgiven by Equitorial and the principal of US $200,000 will be applied against and credited to the reimbursement consideration to be given by Equitorial to Arctic under the Agreement.
Patrick Power, a director of both Equitorial and Arctic, has abstained from voting in respect of the Agreement.
Mr. Power stated: The directors and management of Arctic Star have determined to focus Arctic Star on diamond exploration in the Lac de Gras area of the Northwest Territories. In particular, we are very excited about our prospects on the recently staked 10,000 hectare Redemption project (see News Release dated January 9, 2013) and recently purchased 4,200 hectare Shoe property (see News Release dated February 8, 2013). We plan to conduct drill testing on these properties and are currently in the process of obtaining all permits and permissions to do so. Accordingly we determined to farm out 60% of our present and future interest in the El Havila Property in consideration of Equitorial assuming all our obligations under the existing property agreements. Subject to the Exchange accepting the transaction for filing, Arctic Star does not intend to spend any more of its treasury on the El Havila Property.”
The completion of the transaction is subject to the approval of the Exchange.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.
The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
On behalf of the Board of Directors
ARCTIC STAR EXPLORATION CORP.
Patrick Power, President and Director
For further information, please contact Patrick Power at 604-689-1799.
Qualified Person Statement
Technical information related to the El Havila Property contained in this news release has been reviewed and approved by Dean Pekeski P.Geo, a Qualified Person as defined by National Instrument 43-101.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.