Kinross Gold (KGC), Yorbeau Resources Enter Option Agreement on Rouyn Property
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Yorbeau Resources Inc. is pleased to announce that it has signed a definitive agreement with an affiliate of Kinross Gold Corporation (NYSE: KGC), whereby Kinross has the option to acquire a 100% interest in Yorbeau's Rouyn property ("Property") in Quebec, Canada.
The definitive option agreement provides that Kinross would over a 4-year period, make certain exploration expenditures towards an option to purchase a 100% interest in the Property. In order to earn the purchase option, Kinross must complete a resource estimate for the Property after funding C$12 million dollars of exploration expenditures, including a firm commitment to spend C$3 million in the first 18 months including no less than 12,500 meters of diamond drilling. Kinross will be the operator and project manager of the Property during the option period. The resource estimate is to be completed in accordance with Kinross' standard estimation and reporting practices and in accordance with a process agreed upon in the definitive option agreement, subject to certain key technical parameters to be determined by mutual consent between Kinross and Yorbeau. Upon delivering the resource estimate to Yorbeau, Kinross will have the option to acquire a 100% interest in the Property for a single cash payment consisting of (i) US $25,000,000, plus (ii) 2% of the prevailing gold price(i) multiplied by the number of ounces in measured, indicated and inferred resources identified in the resource estimate(ii). In addition to the cash payment, Yorbeau will retain a 2% NSR on any ounces produced in excess of the number of ounces identified by Kinross in the resource estimate.
The definitive option agreement remains subject to approval by the shareholders of Yorbeau which will be sought at a special meeting to be held following mailing of a proxy circular to the shareholders of Yorbeau. Shareholders holding 15.3% of the issued and outstanding common shares of Yorbeau have entered into voting support agreements pursuant to which they have agreed to vote in favour of the transaction at such special meeting.
The Company is also pleased to announce that, conditional upon the approval of the definitive option agreement by the shareholders of Yorbeau, Kinross will subscribe to a $1 million private placement of units in the Company. The subscription price of each unit (a "Unit") is $0.09. Each Unit will consist of one common share in the capital of the Company and one-half of one common share purchase warrant (a "Warrant"). Each whole Warrant will entitle the holder to purchase an additional common share of the Company (a "Warrant Share") at an exercise price of $0.12 per Warrant Share for a period of 24 months from closing. The closing of the private placement of the Units is scheduled to occur following the approval of the definitive option agreement by Yorbeau's shareholders.
Company president Gerald Riverin stated: "Company management is highly enthusiastic to partner with Kinross to advance the Rouyn project with the intention of realizing value for all project stakeholders. We are also very pleased that Kinross will become a shareholder. Having a senior gold producer with worldwide mining interests as a shareholder will constitute a major development for Yorbeau. Signing the definitive option agreement marks a significant milestone for Yorbeau and the Rouyn project, and we are looking forward to working with Kinross to initiate a major drilling program and explore the project."
(i) The price of gold for these purposes will be determined by the average London Bullion Market Association "initial" and "final" fixing prices for gold quoted in US dollars over the period of 30 trading days prior to the confirmation by Kinross of its completion of the required expenditures
(ii) The number of ounces applied to the calculation of the payment to include those classified as measured, indicated or inferred resources (as such terms are defined by the Canadian Institute of Mining, Metallurgy and Petroleum in the most recent CIM Definition Standards for Mineral Resources and Mineral Reserves)
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