Kenorland Minerals (TSXV: KLD) announced on Wednesday that it has optioned three early-stage gold projects located in Northwestern Ontario to Centerra Gold (TSX: CG) (NYSE: CGAU) with a view of developing the assets under a joint venture.
Under their agreement, Centerra, through its subsidiary Thompson Creek Metals Company, will have the option to acquire up to 70% of the Flora, Western Wabigoon and Algoman projects. The properties, covering a combined area of 2,300 sq. km, are all greenfield assets that have seen limited exploration to date.
Shares of Kenorland rose 8.2% at market close Wednesday following the option agreement with Centerra, giving it a market capitalization of C$154.3 million.
Centerra, a 9.9% shareholder of Kenorland, traded 0.8% higher with a market capitalization of C$2.0 billion.
The option agreement is divided into two earn-in periods. First, Centerra can acquire an initial 51% interest in the projects by spending a total of C$10 million on exploration within three years, including C$3.5 million in the first year, and complete at least 10,000 metres of diamond drilling. Kenorland will act as the projects’ operator during this period.
Upon completion of the first earn-in, Centerra would hold an exclusive right to earn an additional 19% interest in the projects by completing a preliminary economic assessment, based on a mineral resource of not less than 1 million oz. in gold equivalent, within seven years of acquiring the initial 51% Interest.
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