Property asset or share purchase agreement

The TSX Venture Exchange has accepted for filing an option agreement dated as of Dec. 31, 2023, between Sun Summit Minerals Corp. and two arm's-length optionors, whereby the company was granted an exclusive option to acquire from the optionors a 100-per-cent interest in certain mineral claims identified as JD claims and Belle claims, located in British Columbia, known as the JD property.

Pursuant to the option agreement, to exercise the option for the acquisition of a 100-per-cent interest in the JD property, the company will:

• Pay a total of $1,175,000 in cash ($25,000 paid on signing the letter of intent);
• Issue eight million postconsolidation shares of the company to the optionors;
• Incur an aggregate of $22.5-million in exploration expenditures on the JD property.

These option payments will be distributed over several stages over a six-year period. The consolidation must be effective prior to the first share issuance due under the option agreement. In the event of a change of control, the optionors may accelerate the issuance of any remaining shares under the option agreement.

Upon exercising the option for the JD property, the company will grant the optionors various net smelter return (NSR) royalties:

• A 2.0-pepr-cent NSR royalty on the JD claims, of which a 1.0-per-cent royalty can be repurchased with a payment of $7.5-million on or before securing production financing or $10-million on or before reaching commercial production on the JD property;
• A 1.0-per-cent NSR royalty on the Belle claims;
• A 1.0-per-cent NSR royalty on any additional interests acquired within a specified area of interest.

The Belle claims carry an existing 2.0-per-cent NSR royalty to a third party, which can be reduced to 1 per cent with a $2-million payment.

If the option is exercised, the company will pay $250,000 annually in advance royalties until the earlier of the commencement of commercial production or the company's decision to abandon development of the JD property. These advanced payments will be credited against future royalty obligations.

Additionally, a one-time payment of $1-million will be made upon commencement of commercial production.

The above cash, shares considerations and the NSR royalties granted to the optionors will be divided as to 50 per cent to each optionor.

This transaction is arm's length in nature and no finder's fee is payable.

Please refer to the company's news releases dated Nov. 9, 2023, Jan. 9, 2024, Jan. 29, 2024, and Jan. 5, 2024, for further details.