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Hannan and JOGMEC Partner at San Martin Copper-Silver Project in Peru
November 30, 2020 1:02 AM
VANCOUVER, BC / ACCESSWIRE / November 30, 2020 / Hannan Metals Limited ("Hannan" or the "Company") (TSXV:HAN) (OTC PINK:HANNF) is pleased to announce it has signed a binding letter agreement for a significant Option and Joint Venture Agreement (the "Agreement") with Japan Oil, Gas and Metals National Corporation ("JOGMEC"). Under the Agreement, JOGMEC has the option to earn up to a 75% beneficial interest in the San Martin Project by spending up to US$35,000,000 to deliver to the joint venture ("JV") a feasibility study. The San Martin Project covers 656 square kilometres of Hannan's 940 square kilometre Peruvian holdings (Figure 1). Hannan will continue to progress exploration on its remaining Peruvian projects.
Highlights:
The Agreement grants JOGMEC the option to earn an initial 51% ownership interest by funding US$8,000,000 in project expenditures at San Martin over a 4-year period, subject to acceleration at JOGMEC's discretion. JOGMEC's minimum commitment is to fund US$1,000,000 from 01 April 2020 to 31 March 2021 and JOGMEC has agreed to reimburse Hannan for all project related costs from 01 April 2020;
JOGMEC, at its election, can then earn:
an additional 16% interest for a total 67% ownership interest by achieving either a prefeasibility study or funding a further US$12,000,000 in project expenditures in amounts of at least US$1,000,000 per annum (for a US$20,000,000 total expenditure); and,
subject to owning a 67% interest, a further 8% interest for a total 75% ownership interest by achieving either a feasibility study or funding a further US$15,000,000 in project expenditures in amounts of at least US$1,000,000 per annum (for a US$35,000,000 total expenditure);
Should JOGMEC not proceed to a prefeasibility study or spend US$20,000,000 in total, Hannan shall have the right to purchase from JOGMEC for the sum of US$1.00, a two percent (2%) Participating Interest, whereby Hannan Metals' Participating Interest will be increased to fifty-one percent (51%) and JOGMEC's Participating Interest will be reduced to forty-nine percent (49%);
At the completion of a feasibility study, JOGMEC has the right to either:
Purchase up to an additional ten percent (10%) Participating Interest from Hannan Metals (for a total 85% maximum capped Participating Interest) at fair value as determined in accordance with internationally recognized professional standards by an agreed upon independent third-party valuator; or
Receive up to an additional ten percent (10%) Participating Interest from Hannan (for a total 85% maximum capped Participating Interest) in consideration of JOGMEC's agreement to fund development of the project, by loan carrying Hannan until the San Martin Project generates positive cash flow;
After US$35,000,000 has been spent by JOGMEC and before a feasibility study has been achieved, both parties will fund expenditures pro rata or dilute via a standard industry dilution formula;
If the Participating Interest in the Joint Venture of any party is diluted to less than 5% then that party's Participating Interest will be automatically converted to a 2.0% net smelter royalty ("NSR"), and the other party may at any time purchase 1.0% of the 2.0% NSR for a cash payment of US$1,000,000;
Hannan will manage exploration at least until JOGMEC earns a 51 per cent interest, after which the majority participant interest holder will be entitled to act as the operator of the joint venture; and
Initial exploration activities will focus on the collection of the geological, geophysical, and geochemical datasets in the JV project areas. The first phase of exploration is expected to conclude March 2021.
Mr Michael Hudson, CEO, states: "We are privileged to have the Japanese government-owned JOGMEC elect to partner with us on the San Martin copper-silver project. JOGMEC are the perfect partner for such a large and prospective early stage exploration project, that will need significant budget and time commitments. JOGMEC's exploration funding, of up to US$35,000,000, will allow a focused and accelerated exploration program in Peru, thereby maximizing the chances of success while minimizing shareholder dilution. We look forward to a long and successful relationship with JOGMEC, as we work together with local stakeholders, with a common aim to make a significant copper-silver discovery in Peru. Concurrently, Hannan will continue to progress exploration on its other projects". |
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