23:41:25 EDT Wed 12 Jun 2024
Enter Symbol
or Name

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Kermode Resources Ltd (2)
Symbol KLM
Shares Issued 42,590,422
Close 2024-05-16 C$ 0.01
Market Cap C$ 425,904
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Kermode Resources options Rye Patch project in Nevada

2024-05-17 09:16 ET - News Release

Mr. Peter Bell reports


Kermode Resources Ltd. has optioned the Rye Patch mine project in Nevada, United States. The option provides Kermode with the right but not the obligation to undertake a cash lease of the property. The project comprises patented and unpatented mining claims covering approximately 120 acres in Pershing county, Nevada, owned by Gold Range Company LLC.

Kermode will not issue any shares under the transaction at any time.

The first phase of the deal is the option, where Kermode begins with a one-year term that can be renewed for additional one-year periods by mutual consent of the counterparties so long as Kermode is paying or causing to be paid all annual claim maintenance fees and holding costs.

During the first phase, Kermode may carry out certain predrilling mineral exploration activities, including, but not limited to, mapping, rock, soil and geochemical sampling, geophysical surveys and other exploration activities. Kermode will not conduct drilling activities of any kind or nature whatsoever, including auger, core, rotary, reverse circulation or other, without first entering into the lease agreement contemplated in this option agreement.

The second phase of the deal is a lease, where Kermode commits to these cash payments:

  • On signing the lease -- $5,000 (U.S.);
  • On the first anniversary -- $5,000 (U.S.);
  • On the second anniversary -- $10,000 (U.S.);
  • On the third anniversary -- $50,000 (U.S.);
  • On the fourth anniversary -- $100,000 (U.S.);
  • On the fifth and sixth anniversaries -- $150,000 (U.S.);
  • On the seventh and eighth anniversaries -- $200,000 (U.S.);
  • On the eighth anniversary and thereafter -- $250,000 (U.S.).

The lease has a 10-year term and is renewable for 10-year increments so long as exploration or mining activity is continuing.

The proposed transaction includes additional terms as follows:

  • Royalty: There shall be a 5-per-cent net smelter return (NSR) royalty. The royalty is subject to the following buydown conditions: The first 1 per cent of the NSR royalty may be bought down for $1-million; the second 1 per cent of the NSR royalty may be bought down for $2-million; and the third 1 per cent of the NSR royalty may be bought down for $2-million, leaving at least a 2-per-cent NSR royalty to Gold Range.
  • Advance royalty payments: The cash payments are minimum advance royalties and the total over any previous five-year period shall be recoupable from production royalty (NSR) payments.
  • Inflation index: All cash payments and buydowns for year 5 and beyond are indexed to the CPI (consumer price index) with a 2024 base year.
  • Future sales interest: An amount equal to 10 per cent of gross value of any transaction will be payable by Kermode to the Gold Range if Kermode sells the leasehold interest, subject to consent by Gold Range.

During the first phase, Gold Range may terminate the option upon 15 days of written notice, provided that, during such 15-day period, Kermode will have the right to enter into the contemplated lease agreement. During the second phase, Gold Range may not terminate the lease.

During the first phase, the option will not be assignable. During the second phase, the lease and leasehold interest will be assignable and only then with Gold Range's written consent not to be unreasonably withheld, which may be withheld at Gold Range's discretion for reason.

About Kermode Resources Ltd.

Kermode is a junior mining company hunting for exploration opportunities around the world.

We seek Safe Harbor.

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