Tearlach Resources agreement for Shelby property

May 4, 2023

2023-05-03 19:37 ET – Property Agreement

The TSX Venture Exchange has accepted for filing documentation pertaining to an assignment and assumption agreement dated Jan. 11, 2023, as amended on Feb. 9, 2023, between the company and an arm’s-length party, whereby the assignor agreed to assign the company its option to acquire all of its right, title and interest in and to six lithium claim groups located in the James Bay region of Quebec, covering approximately 11,226 hectares (each an assigned project and collectively the Shelby project). The Assignor’s rights to the Shelby Project are set out in a Property Option Agreement dated December 12, 2022, as amended on January 4, 2023 (together, the “Option Agreement”) between the Assignor and an arm’s length party (the “Optionor”).

In consideration, the Company will make cash payments totaling $2,181,817.92 and issue a total of 1,248,616 shares at a deemed price of $2.30 to the Assignor and the Optionor in stages, as outlined below:

–Payment of $90,909.08 in cash per Assigned Project, or $545,454.48 in aggregate, and issuance of 537,154 shares in the Company’s capital at $2.30 per share to the Assignor within three business days of TSX-V approval.
–Payment of $90,909.08 in cash per Assigned Project, or $545,454.48 in aggregate (with $272,727.24 in cash payable to the Assignor and $272,727.24 in cash payable to the Optionor), and issuance of 39,525 shares per assigned project for 237,154 shares in aggregate (with 118,577 shares issuable to the Assignor and 118,577 shares issuable to the Optionor) on or before the first anniversary of the Option or Assignment Agreement, as applicable.
–Payment of $90,909.08 in cash per Assigned Project, or $545,454.48 in aggregate (with $272,727.24 in cash payable to the Assignor and $272,727.24 in cash payable to the Optionor), and issuance of 39,525 shares per assigned project for 237,154 shares in aggregate (with 118,577 shares issuable to the Assignor and 118,577 shares issuable to the Optionor) on or before the second anniversary of the Option or Assignment Agreement, as applicable.
–Payment of $90,909.08 in cash per Assigned Project, or $545,454.48 in aggregate (with $272,727.24 in cash payable to the Assignor and $272,727.24 in cash payable to the Optionor), and issuance of 39,525 shares per assigned project for 237,154 shares in aggregate (with 118,577 shares issuable to the Assignor and 118,577 shares issuable to the Optionor) on or before the third anniversary of the Option or Assignment Agreement, as applicable.

The Company may elect to pay the cash equivalent value for any share issuance obligations under the Option Agreement.

The Company must pay a one-time cash bonus of $2,000,000 to the Assignor on a per Assigned Project basis (each, a “Drilling Bonus”) upon the Company receiving a verified diamond drill intersection from one or more of the Assigned Projects which returns length-weighted assays of at least 10 metres of continuous pegmatite mineralization grading 1% Li2O or greater from a hole sited perpendicular to the known or assumed geological strike of the pegmatite unit and drilled in accordance with CIM Mineral Exploration Best Practices Guidelines within four years of the effective date of the Assignment Agreement (each, a “Drilling Milestone”). For greater certainty, if the Company receives drilling results that evidence achievement of the Drilling Milestones on all six Assigned Projects, the Company is obligated to pay the Assignor six Drilling Bonuses of $2,000,000 each for total Drilling Bonuses of $12,000,000.

Upon exercise of the Option by the Company (as defined in the Option Agreement) with respect to each Assigned Project, the Company has agreed to grant a 3% net smelter returns royalty on each Assigned Project in favor of the Assignor (each, a “NSR Royalty”). The Company will have the irrevocable right to purchase 0.5% of the NSR Royalty on each Assigned Project from the Assignor at any time after the Option is exercised for a purchase price of $1,000,000 for each Assigned Project.

In the event the Company elects to abandon one or more Assigned Projects in accordance with the terms of the Option Agreement, the remaining consideration payable and issuable by the Company to the Assignor will be reduced by $45,454.54 cash and $45,454.54 in shares per Assigned Project abandoned. If an Assigned Project is abandoned before the Drilling Milestone or exercise of the Option, no Drilling Bonus or NSR Royalty will be paid for that project.

For further details, please refer to the Company’s news releases dated January 12, 2023, and April 21, 2023.

https://tearlach.ca/