WestKam Gold has entered a letter of intent (LoI) to sell its Bonaparte property near Kamloops in British Colombia to MX Gold.
This purchase is made in consideration for 40 million shares of MX Gold, which represents an approximate 19.7% interest in MX Gold on a non-diluted basis, assuming the company does not issue any additional securities prior to closing.
WestKam has planned to dividend a significant number of the MX Gold shares to its shareholders on a pro-rata basis, subject to compliance with all applicable laws.
The deal is considered to be a 'non-arm's length transaction' under the policies of TSX Venture Exchange.
WestKam director Akash Patel is also a director and executive officer of MX Gold.
The LoI plans a 30-day due diligence period, where MX Gold will evaluate all information about the Bonaparte property. Within this period, WestKam will also conduct an assessment on MX Gold.
Another condition of the Bonaparte property sale is entering a definitive agreement within 60 days, with terms and conditions acceptable to both parties.
Upon signing of the definitive agreement, WestKam will have to pay a break fee of $37,500, which is payable within six months of termination, either in cash or in common shares if the deal does not close due to the company being unable to satisfy all its closing conditions.
Also, effective once the definitive agreement has been signed will be MX Gold paying WestKam all costs incurred for this transaction, up to a maximum amount of $75,000.
WestKam previously a optioned 5% interest in the Bonaparte property to MX Gold if it spent a minimum of $650,000 on exploration by 31 December 2016.
WestKam is awaiting evidence that qualifying expenditures have been incurred within the deadline in order to determine whether MX Gold has earned its 5% interest in the property.
The firms have agreed that if MX Gold has earned the 5% interest in the Bonaparte property, then the property interest being acquired under the LoI will be the remaining 95% interest. However, if MX Gold has not earned the required 5%, then the interest being acquired under the LoI will be 100%, without change in the consideration payable.
In additon, Westkam has signed an LoI with Platinum Capital to purchase three mineral claims adjacent to the Bonaparte property. Under this transaction, WestKam will pay $10,000 and 11,000,000 common shares of the company as consideration.
Both transactions are subject to customary closing conditions and approvals.