Velocity has entered into a binding letter agreement with Dundee Precious Metals Inc., whereby Velocity has granted to Dundee Precious Metals an exclusive option to acquire a 75% interest in and to the Iglika copper-gold prospecting license.
To exercise the Option in full and acquire a 75% interest in the Property, Dundee Precious Metals must (over a 5-year period):
- make a US$250,000 initial cash payment to Velocity;
- fund a total of 40,000 meters of drilling on the Property;
- fund and deliver a mineral resource estimate on a deposit located within the Property prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”);
- fund and deliver a prefeasibility study on a deposit located within the Property prepared in accordance with NI 43-101; and
- make a further US$1,500,000 cash payment to Velocity
If Dundee Precious Metals Inc. completes the Earn-In Requirements during the Option term, it shall acquire an indirect 75% legal interest in the Property, subject to an existing 2% net smelter returns royalty, and DPM and Velocity shall be deemed to have formed a joint venture for the continued exploration and development of the Property. If a participant’s participating interest in the JV falls below 10%, that participant shall be required to transfer its participating interest to the other participant in exchange for the grant of an ongoing royalty to be paid at 2% of net smelter returns, half of which (being 1%) can be bought-out prior to a production decision for US$5,000,000.