Canadian exploration company Gold Hunter Resources has reached a definitive option agreement with Magna Terra Minerals to acquire a 100% undivided interest in the Great Northern and Viking Projects in Newfoundland and Labrador.

This transaction is set to consolidate a significant gold district.

As part of the transaction, Gold Hunter will make an initial cash payment of $300,000 and issue shares worth $1m to Magna Terra upon closing.

To fully acquire the Great Northern and Viking Projects, Gold Hunter may exercise its right by making additional payments and issuing shares valued at $3.2m on or before the first anniversary of the closing.

The agreement stipulates that Gold Hunter must make a $675,000 cash payment and issue shares worth $4.25m on or before the second anniversary of the closing.

Gold Hunter has the option to accelerate the process by satisfying the option exercise price at any time before this date.

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The number of shares to be issued will be calculated based on a 20-day volume-weighted average price or a minimum of $0.05 per share.

If the share price falls below $0.05 at the time of issuance, Gold Hunter will compensate Magna Terra with a cash payment equivalent to the shortfall.

Magna Terra will also gain the right to nominate one director to Gold Hunter’s board, as outlined in the option agreement.

This move is significant for Gold Hunter, as the Great Northern and Viking Projects encompass the Thor and Rattling Brook deposits, along with several other exploration targets.

The Thor Deposit has an open-pit constrained indicated mineral resource of 817,000t at an average grade of 1.70g/t gold, amounting to 45,000oz. The Rattling Brook Deposit, located 14km from the Thor Deposit, features key mineralisation across three zones.

The acquisition is positioned along a 30km section of the Doucers Valley Fault, a known geological feature hosting several gold occurrences.

This enhances Gold Hunter’s portfolio and supports its growth in the Newfoundland and Labrador gold sector.

The closing of the transaction is contingent upon necessary approvals, including that of the Canadian Securities Exchange, and the satisfaction of customary closing conditions.

Gold Hunter anticipates finalising the transaction in the forthcoming weeks.

Gold Hunter president and CEO Sean Kingsley said: “The Great Northern and Viking Projects along with consolidating the surrounding area represents a compelling addition to our portfolio, offering substantial exploration upside in a highly prospective region.

“The additional mineral claims further solidify our position in this key area and commitment to Newfoundland and Labrador.”