Mr. Greg Gibson reports

KERR MINES ENTERS INTO AGREEMENTS TO SELL ITS NORTHERN ONTARIO ASSETS

Kerr Mines Inc. has entered into two agreements, pursuant to which the company has agreed to sell its interest in its Larder Lake project for aggregate proceeds of approximately $11-million.

Pursuant to the terms of the first agreement, the company has agreed to sell its Kerr Addison property, McGarry mine property and additional McGarry township claims, in exchange for:

• $1.25-million payable to the company on the date of closing;
• $750,000 payable to the company 18 months from the date of closing;
• A 2-per-cent net smelter return royalty in favour of the company on the properties. The purchaser shall have the right to purchase 1 per cent of the royalty from the company for the sum of $1-million.

Pursuant to the terms of the second agreement, the company has agreed to sell its Bear Lake gold property and its remaining McVittie township claims, in exchange for:

• $5.6-million (U.S.) payable to the company on the date of closing;
• $2.4-million (U.S.) payable to the company upon the occurrence of any of the following events:
  • Sale of the property by the purchaser;
  • Sustained gold price increase equal to $1,500 (U.S.) per ounce over a six-month period;
  • Establishment of 500,000 ounces of proven or probable reserves on the property;
  • Completion of a feasibility study;
  • Secured production financing;
• A 2-per-cent net smelter return royalty in favour of the company on the properties. The purchaser shall have the right to purchase 1 per cent of the royalty from the company for the sum of $1-million.

Completion of the transactions will be subject to certain standard conditions including, without limitation, satisfactory due diligence and receipt of all necessary consents, waivers, permits, exemptions, orders and approvals. The parties anticipate closing both transactions on or before the end of December, 2014.

We seek Safe Harbor.