Globex Mining Enterprises (TSE:GMX) said Monday that it, along with its joint venture partner, Geoconseils Jack Stoch Ltée, have agreed to option their full interest in Duparquet Assets to Xmet (CVE:CME), in a deal valued at about $9.0 million.
Duparquet Assets, a 50-50 joint venture (JV) between Globex and Geoconseils, owns the Duquesne West and Ottoman Fault properties in the Abitibi region of Quebec.
The original option agreement saw the JV relinquish just 75 percent of the assets. However, under the terms of the new option agreement, the companies will sell off 100 percent of Duparquet Assets in exchange for one of two cash payment scenarios.
Globex and Geoconseils will receive either a single cash payment of $9.0 million within six months of signing the new agreement, subject to a sliding scale gross metal royalty (NYSE:GMR) of up to three percent; or a single cash payment of $6.5 million within six months of signing the new agreement, plus one of four payment options.
Those options will see the JV receive either $2.5 million in cash within one year of the agreement, $2.6 million in cash within two years of the agreement, $2.7 million in cash within three years of the agreement, or $2.8 million in cash within four years of the agreement.
Under the second payment scenario, should Xmet choose not to make one of the four cash payment options, Globex and Geoconseils will retain a 25 percent carried interest in the company, plus the three percent royalty. If the option is carried out, Globex and Geoconseils will commence pro rata contributions toward production, following the delivery of a bankable feasibility study by Xmet.
The new agreement eliminates Xmet's obligation to carry out another $6 million in work obligations over the next four years, as well as its annual five percent of carrying costs.
In October 2011, Xmet reported an NI 43-101 compliant inferred resource of 4.17 million tonnes at an average grade of 5.2 g/t gold at the property, hosting 727,000 ounces of gold. The report was prepared by Watts, Griffis, McOuat Ltd.
Xmet said it has completed 9,000 metres of its fully funded 13,000-metre phase two diamond drilling program on Duquesne-Ottoman, which aims to expand the resource beyond the current compliant amount.