Summary of the Transaction
First Option
The Option may be exercised by Jinhua acquiring an initial 80% interest in and to the Pluto Property (the 'First Option') by: paying
Upon satisfaction of the payments set out above, the first stage of the Option will be deemed to be exercised and Jinhua will earn an 80% interest in and to the Pluto Property. Any
Upon exercise of the First Option, Jinhua and Musk will be deemed to have formed a joint venture (the 'Joint Venture') on an 80% - 20% basis, respectively, and will promptly execute a joint venture agreement based upon the material terms attached to the Option Agreement. Jinhua will initially have a participating interest in the Joint Venture and Musk will have a carried interest in the Joint Venture until the earlier of: (a) exercise of the Second Option as defined below and (b) termination of the Second Option. In the event the Second Option is terminated for failing to satisfy the conditions thereof, Musk's interest in the Pluto Property will automatically change to a participating interest.
Optionor Expenditures
Pursuant to the terms of the Option Agreement, from
Joint Venture Terms
Upon the formation of the Joint Venture, Jinhua will have an initial participating interest of 80% and Musk will have an initial carried interest of 20% until the earlier of the exercise of the Second Option and the termination of the Second Option. In the event the Second Option is exercised, the Joint Venture will terminate. In the event the Second Option is terminated, Musk's interest in the Pluto Property will automatically change to a participating interest.
The parties will bear their respective proportionate costs in connection with advancing the Pluto Property. The Pluto Property will be held in the names of the parties jointly as tenants in common in proportion to their interests. Legal title will be transferred and held in the name of the operator in trust for the benefit of the Joint Venture. A management committee will be created to supervise and coordinate the development of the Pluto Property and to consider and approve operations plans and operating programs. Each party will have the right to appoint one representative to the management committee for each 20% interest in the Joint Venture held.
Jinhua, being the party with the larger initial interest, will be the initial operator under the Joint Venture. The operator is entitled to include in costs a charge for management supervision and corporate administration of the Joint Venture equal to: (a) 5% of costs for exploration work until a feasibility report is commissioned; (b) 3% of costs following feasibility to production and (c) 5% during the period in which a mine closure plan is effective.
In the event a party has its interests reduced to below 10% through dilution by not participating in development and costs, the party's interests will be reduced to a 1% royalty of the net smelter returns from the Pluto Property as and when produced.
General Terms
The parties anticipate they will close the Qualifying Transaction and grant the Option on or before
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FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements. All statements, other than statements of historical fact that address activities, events, or developments that the Company believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements regarding the intended use of proceeds of the Offering and other matters regarding the business plans of the Company. The forward-looking statements reflect management's current expectations based on information currently available and are subject to a number of risks and uncertainties that may cause outcomes to differ materially from those discussed in the forward-looking statements including that the Company may use the proceeds of the Offering for purposes other than those disclosed in this news release; adverse market conditions and other factors beyond the control of the Company. Although the Company believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, undue reliance should not be put on such statements due to their inherent uncertainty. Factors that could cause actual results or events to differ materially from current expectations include general market conditions and other factors beyond the control of the Company. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
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