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Riverside Resources Inc
Symbol C : RRI
Shares Issued 62,691,188
Close 2019-05-15 C$ 0.175
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Riverside arranges $2M (U.S.) financing with BHP

2019-05-16 06:59 ET - News Release

Dr. John-Mark Staude reports

RIVERSIDE SIGNS US$2,000,000 STRATEGIC FUNDING AGREEMENT WITH BHP IN SONORA, MEXICO

Riverside Resources Inc. has signed a two-year, $2-million (U.S.) exploration financing agreement with BHP Exploration Chile SpA for the financing of generative exploration in the copper-producing belt of Mexico. The program will focus on identifying and developing exploration opportunities leading to the discovery of new large copper deposits within an area of interest (AOI) using Riverside's technical knowledge base of copper systems and strong generative exploration team strategically based in Hermosillo, Sonora. BHP and Riverside will pool their data, including decades of historical work, into an integrated database. Riverside can now leverage geophysical, geochemical and geological technical platforms into a new targeting synthesis to complete tenure acquisitions.

BHP will finance $1-million (U.S.) on an annual basis for a minimum of two years for generative grassroots exploration within northeastern Sonora in the region of many copper deposits and some very large copper operations. The exploration area being explored is in the central part of the Laramide copper belt that continues northward into Arizona and New Mexico, hosting numerous large Tier 1 copper deposits. For example, the third-largest copper mine in the world, the Buenavista del Cobre operations in Cananea, is located within the AOI.

Properties that are identified and deemed to be of interest will become defined projects (DPs), which will move to a second phase of the program whereby BHP would finance up to an additional $5-million (U.S.) of exploration work and make success fee payments to Riverside on a per-project basis.

Riverside's president and chief executive officer, John-Mark Staude, stated: "We are delighted to combine the financing support of a major world copper leader with our in-country Mexico expertise to pursue exploration activities and advance promising projects. The two-year program helps Riverside expand our copper exposure, while still conserving capital for our other self-funded initiatives."

Exploration financing agreement

Overview

The two-year, $2-million (U.S.) exploration financing agreement was signed on May 15, 2019. The program will target projects containing primarily copper, with the objective of advancing quality copper prospects through three distinct stages: project generation phase, project operation phase and joint venture stage.

Project generation phase

During the project generation phase, Riverside will act as the operator and earn a monthly fee plus 10 per cent on internal activities and 5 per cent on third party external contractor work with an estimated $85,000 (U.S.)/month for generative work. Riverside's technical team will carry out generative exploration and work up targets with the aim of moving prospects toward the project operation phase.

Project operation phase

A prospect that is advanced to the project operation phase will become a DP and will trigger a success fee of $200,000 (U.S.) payable to Riverside for each prospect so advanced. Riverside can earn a bonus of an extra $200,000 (U.S.) if at least three projects are progressed to DP making a total of $800,000 (U.S.) in DP success fees. BHP will finance up to $5-million (U.S.) for drilling and further exploration on each DP, having the option to become the operator of such DP. Riverside has the option to contribute between 10 per cent and 20 per cent of the exploration expenditures during this phase, with BHP financing the balance (80 to 90 per cent) should Riverside elect to participate. BHP may discontinue financing with respect to a specific DP at any time in which case Riverside would be entitled to 100-per-cent interest in the project and, depending on the funds expended to date, BHP may retain a net smelter returns royalty interest.

Joint venture stage

BHP may elect to advance a DP to the joint venture stage, at which time title to the project would be transferred to a joint venture company and the parties would enter into a formal joint venture partner agreement. If Riverside's cash contribution reaches a minimum of 10 per cent in phase 2, the company's deemed initial interest in the joint venture company will be 20 per cent. If Riverside's contribution to expenses to a DP is less than 10 per cent, Riverside will have no interest in the joint venture. For each DP that is advanced to the joint venture stage, Riverside will be entitled to a success fee of $1.5-million (U.S.) if Riverside's contribution to expenses to a DP is at least 10 per cent and $300,000 (U.S.) if it is less than 10 per cent. At the point of joint venture formation, with respect to a DP in which Riverside has at least a 10-per-cent interest, Riverside may sell its interest earned as a result of its contribution to expenses to BHP at the rate of $100,000 (U.S.) for each 1-per-cent interest sold; and BHP may purchase the difference between 20 per cent and Riverside's actual Contribution to expenses at the rate of $300,000 (U.S.) for each 1-per-cent interest purchased.

Operational details

A technical committee (TC) will be formed to approve work programs and budgets during phases 1 and 2. The TC will have two representatives from each of BHP and Riverside with equal voting powers for both groups for DPs operated by Riverside. For DPs operated by BHP, BHP will have the casting vote on the TC.

About Riverside Resources Inc.

Riverside is a well-financed exploration company driven by value generation and discovery. The company has no debt and fewer than 63 million shares outstanding with a strong portfolio of gold-silver and copper assets in North America. Riverside has extensive experience and knowledge operating in Mexico and leverages its large database to generate a portfolio of prospective mineral properties. In addition to Riverside's own exploration spending, the company also strives to diversify risk by securing joint venture and spinout partnerships to advance multiple assets simultaneously and create more chances for discovery.

We seek Safe Harbor.

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