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Emgold Mining signs an amended LOI for purchase of the Golden Arrow Property

Published by , Assistant Editor
Global Mining Review,

Emgold Mining Corporation has executed an amended non-binding letter of intent (LOI) dated 27 December 2017 with Nevada Sunrise Gold Corporation. The Amended LOI replaces a prior non-binding letter of intent dated 17 July 2017 with Nevada Sunrise and provides for the acquisition by Emgold of an immediate 51% interest in the Golden Arrow gold-silver property in Nevada; together with a first option to acquire an additional 29% interest followed by a second option to acquire the final 20% interest in the Golden Arrow Property by making the exploration expenditures and cash payments.

Golden Arrow Property Details

To date, two main exploration targets have been drilled on the Golden Arrow Property (which is located 40 miles east of Tonopah in Nye County, Nevada) focussing on bulk disseminated mineralisation – the Gold Coin and Hidden Hill deposits. Numerous other targets have been identified for exploration. Emgold's management believes there is potential to expand both the Hidden Hill and Gold Coin resources and for discovery of other bulk disseminated mineralisation on the Golden Arrow Property. In addition, historic underground mine workings lie along the Page Fault and other structures on the Golden Arrow Property indicating potential for vein style mineralisation that has been subject to limited modern exploration, if any, to evaluate its potential.

Golden Arrow Sale and Option Terms

The terms of the Amended LOI provide that, subject to the satisfaction of certain conditions, including TSX-V acceptance, the entry into a definitive sale and option agreement with Nevada Sunrise and Emgold completing a financing in an amount necessary to pay (i) related fees and expenses of the Transaction; (ii) the remaining third property payment of CAN$215 000; (iii) general corporate overhead for 6 months; and (iv) the first 12 months of minimum exploration expenditures on the property in the amount of CAN$250 000, Emgold (or a wholly-owned subsidiary of Emgold) would acquire a 51 % interest in the Golden Arrow Property by (i) making cash payments to Nevada Sunrise in the aggregate amount of CAN$282 000; and (ii) issuing to Nevada Sunrise 2 500 000 common shares in the capital of Emgold.

The Amended LOI further provides that Nevada Sunrise would grant to Emgold (or a wholly-owned subsidiary of Emgold) the sole and exclusive right and option (the First Option) to acquire an undivided additional 29% (for a total of 80%) interest in the property, which would be exercisable by Emgold for a period of 36 months from the Closing Date (the Option Period) by Emgold (i) incurring exploration expenditures in the aggregate amount of CAN$2 750 000; and (ii) issuing to Nevada Sunrise an additional 2 500 000 common shares in the capital of Emgold.

Upon Emgold completing the First Option, the Parties would be deemed to have formed a Nevada joint venture (JV). The JV would be established as a separate company or using an existing subsidiary of Emgold or Nevada Sunrise, with 80% of the shares owned by Emgold and 20% of the shares owned by Nevada Sunrise.

After the completion of the exercise of the First Option, and within 12 months of a formal production decision for the property or at any time prior to that date, and provided that Emgold has at least a 75% interest in the JV, Emgold would have the further option (the Second Option) of purchasing Nevada Sunrise's interest in the JV based on Nevada Sunrise's percentage interest (rounded to the nearest whole number) in the JV at the time the Second Option is exercised.

Nevada Sunrise would not be required to contribute to the JV until Emgold completes or terminates the First Option. Thereafter, the parties would be required to contribute to the JV based on their ownership percentages of the JV, or their interests therein would be diluted in proportion to their contributions to the JV.

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