Harmony Gold (NYSE:HMY) announced it has entered a binding preliminary agreement with Scorpio Gold to acquire all of its Caribou Gold Property.
A press release from Scorpio said, "Subject to due diligence, definitive documentation and regulatory approval, the binding preliminary agreement (the "Agreement") gives Harmony the right to acquire a 100% interest in the Caribou Gold Property located in Halifax County, Nova Scotia, including certain equipment and other mining assets held by Scorpio and located on the Caribou Gold Property (the "Option"). Scorpio holds an option acquire a 100% registered and beneficial interest in the Caribou Gold Property, subject to a net smelter return royalty of 2.5% held by the underlying owner, John Logan Enterprises Ltd."
Terms of the deal include an upfront payment of $25,000, on the execution of the agreement. Upon approval by the TSX Venture Exchange, Harmony will pay out another $225,000 within five business days, and another $250,000 within a year from the date of acceptance.
Along with those payments, Harmony will have to spend a minimum of $1 million in exploration and development costs no longer than 12 months from the acceptance date. Of that, $800,000 of that must be spend by March 1, 2011.
Also within five business days of the acceptance date, Harmony is required to issue 3 million shares in its company to Scorpio. They also must pay to John Logan Enterprises all advance royalty payments or claim renewals in relationship to the net smelter return royalty, specifically a $250,000 advance royalty payment to be made by April 25, 2011.
All of this must be satisfied for them to get 100 percent control of the asset.
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