Mr. Duane Parnham reports
BROADWAY AND KENNECOTT SIGN EARN-IN WITH OPTION TO JOINT VENTURE AGREEMENT
Broadway Gold Mining Ltd.
has signed an earn-in with option to joint venture agreement with Kennecott Exploration Company, part of the Rio Tinto Group, on its Madison copper-gold project located in the Butte region of Montana.
- Kennecott earn-in milestones in order of dollar value are as follows:
- $30-million (U.S.) earn-in over 11 years that generates a 30-per-cent retained interest for Broadway shareholders;
- $15-million (U.S.) earn-in over eight years that generates a 35-per-cent retained interest for Broadway shareholders;
- $5-million (U.S.) earn-in over five years that generates a 45-per-cent retained interest for Broadway shareholders;
Minimum of $1-million (U.S.) of exploration expenditures in the first year;
Cash to Broadway of $225,000 (U.S.) over the first five years;
Kennecott may request Broadway to conduct exploration on its behalf during the first year in return for a 10-per-cent administration charge;
Broadway has the right to conduct independent drilling and exploration of the skarn zones during the first year;
Broadway has a right of first offer to acquire Kennecott's interest in the property in the event Kennecott wishes to divest its interest;
The joint venture may be formed with 55 per cent to Kennecott and 45 per cent to Broadway upon the satisfaction of the first earn-in, 65 per cent to Kennecott and 35 per cent to Broadway upon the satisfaction of the second earn-in, or 70 per cent to Kennecott and 30 per cent to Broadway upon the satisfaction of the third earn-in;
The JV will be managed by Rio Tinto and financed by each participant in accordance with its interest;
Broadway may elect to not finance its interest and be diluted down to a 10-per-cent interest. If Broadway is diluted below a 10-per-cent interest, its interest will convert to a 2-per-cent net smelter royalty capped at $50-million (U.S.).
Under the terms of the earn-in agreement, Kennecott has an option to acquire a 55-per-cent undivided interest in the property by incurring exploration and related expenditures of $5-million (U.S.) within the first five years, including a minimum exploration budget of $1-million (U.S.) in the first year. If Kennecott exercises the first option, it may elect to earn an additional 10-per-cent undivided interest, for a total undivided interest of 65 per cent, by incurring additional expenditures of $10-million (U.S.) within the following three years. If Kennecott exercises the second option, it may elect to earn an additional 5-per-cent undivided interest, for a total of 70 per cent, by incurring additional expenditures of $15-million (U.S.) within the subsequent three-year period. Kennecott may elect to create the JV after exercising each option to earn in.
The initial exploration program applications have been submitted to the Bureau of Land Management, Montana.
"Signing this agreement is testimony to the excellent technical work performed to date by our team of geologists and consultants," said Duane Parnham, executive chairman of Broadway. "We are ideally located near Butte, Montana, in a porphyry camp with what appears to be a Cadia-like skarn-over-porphyry deposit."
Robert S. Middleton, PEng, Broadway's qualified person as defined by National Instrument 43-101, has reviewed and approved the technical information contained in this news release.
About Broadway Gold Mining Ltd.
Through its wholly owned Montana-based subsidiary, Broadway Gold Corp., the company is focused on the exploration and development of its two mines, the Broadway and Madison mines, and the delineation of the porphyry source of their mineralization. The company owns a 100-per-cent interest in the two mines and has staked an area of four square miles in the Butte-Anaconda region of Montana, a porphyry-based mining district. The company is permitted for mining and exploration.
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