Canadian Shield And Kinross Sign LOI to Form Alliance for Exploration In Peru
June 23, 2009 Filed Under: Mining Investment, Mining Stocks
Canadian Shield Resources Ltd. announce that it has signed a Letter of Intent with Kinross Gold Corporation. The LOI provides guidelines for the Exploration Alliance which will carry out generative exploration in a designated area of Peru. Kinross will fund US$500,000 in the generative program over a 12 month period and Canadian Shield will be the initial operator of the exploration programs.
Canadian Shield will provide local expertise and exclusive access to a proprietary database built by Gallant Minerals Peru Ltd. S.A., a private exploration company. Canadian Shield acquired 90% of Gallant Peru in 2004. The database comprises a comprehensive compilation of both public and confidential information. All the information has been digitized and is in a Geographic Information System format with dozens of targets identified, many of which have yet to be field checked.
The LOI provides that Kinross will fund US$500,000 of generative work over 12 month term of the Exploration Alliance. Canadian Shield and Kinross may form a joint venture in respect of any exploration project identified under the Strategic Alliance and subsequently staked, optioned or acquired (a “Joint Venture Project”), subject to the discretion of a Technical Advisory Committee made up of two members from each of Kinross and Canadian Shield. Each Joint Venture Project will be initially owned 50% by Kinross and 50% by Canadian Shield. Kinross will have the option to earn an additional 25% participating interest in the Joint Venture Project by spending a pre-determined amount over a two year period. Once Kinross has earned a 75% participating interest, the Joint Venture Project will then be funded on a pro-rata 75/25 basis by Kinross and Canadian Shield, respectively. Standard dilution clauses will apply, whereby if either party’s interest dilutes to less than 10%, that party’s interest in the Joint Venture Project will revert to a 2% net smelter royalty on all metals produced. The LOI is a non-binding agreement and is subject to Kinross, Canadian Shield and Gallant Peru entering into a definitive agreement relating to the Exploration Alliance.
“Canadian Shield offers Kinross regional expertise in Peru, an experienced exploration team and a database which will allow us to immediately focus on high priority, grassroots exploration targets”, said Phil Anderson, VP Exploration for Canadian Shield. “We are extremely pleased to have the opportunity to partner with Kinross and look forward to generating new projects and increasing shareholder value for both parties through this alliance”, added Mr. Anderson.