THUNDER BAY, ON, Nov. 20, 2013 /CNW/ - Kesselrun Resources Ltd.
(TSXV:KES) ("Kesselrun") and Goldlund Resources Inc. ("Goldlund"), a
private company incorporated in Ontario, are pleased to announce that
they have agreed to terms regarding the grant to Kesselrun of the
option to acquire an undivided 10% non-diluting interest in certain
mining claims, mining patents and mining leases comprising the Goldlund
Project located near the town of Sioux Lookout, Ontario, in which
Goldlund holds a 100% interest.
In order to acquire its interest in the property, Kesselrun is required
to incur aggregate exploration expenditures on the property of
$1,000,000 by December 31, 2013.
The Goldlund Project contains an historic mineral resource estimate
completed by Todd McKracken of Wardrop (now Tetra Tech) in October,
2011 (see www.goldlund.com).
Goldund Project Mineral Resource Estimate at 0.50 g/t Au Cut-Off Grade
Gold Grade g/t
Measured + Indicated
Kesselrun is not treating the above historic mineral resource estimate
as a mineral resource in accordance with the standards of National
Instrument 43-101, but merely as an indication of potential
mineralization on the property.
At any time after Kesselrun has acquired its interest in the property
and prior to December 31, 2015, Kesselrun shall be entitled to transfer
such interest back to Goldlund upon 15 days prior written notice in
exchange for the issuance to Kesselrun of senior unsecured convertible
debentures (the "Convertible Debentures") of the parent company of
Goldlund ("Parentco") in the principal amount of $2,000,000. Further,
in the event that Kesselrun exercises the option and acquires its 10%
interest in the property, then at any time after December 31, 2014 and
on or prior to December 31, 2017, Goldlund shall have the right to
require that Kesselrun transfer such interest back to Goldlund (the
"Back-In Right") upon 30 days prior written notice to Kesselrun, in
exchange for the issuance to Kesselrun of Convertible Debentures of
Parentco in the principal amount of $2,000,000. Goldlund shall also be
entitled to exercise the Back-In Right at any time after the earlier of
(a) Kesselrun acquiring its 10% interest in the property, and (b)
January 1, 2015, in the event that Parentco is party to a business
combination transaction, upon 30 days prior written notice to Kesselrun
and payment to Kesselrun of either $2,000,000 in cash, or at the option
of Goldlund, Convertible Debentures of Parentco in the principal amount
Upon Kesselrun acquiring its interest, the parties will enter into a
joint venture agreement pursuant to which Goldlund shall incur all
further expenditures on the property until it reaches commercial
production. After the commencement of commercial production, Kesselrun
and Goldlund will be obligated to contribute funds to approved programs
and budgets of the joint venture in proportion to their respective
participating interests. Goldlund will be the initial operator of the
The Convertible Debentures of Parentco will mature on the date which is
seven years following their date of issuance, and will earn interest at
a fixed rate of 10% per annum compounded annually. At the election of
Parentco, up to 50% of the interest may be paid by the issuance of
additional Convertible Debentures of Parentco. In the event of a
liquidity event, the principal amount and all accrued and unpaid
interest will automatically convert to common shares of Parentco or the
subsidiary of Parentco which is the subject of the liquidity event, at
a conversion price per common share that is equal to 50% of the value
of each common share as determined in the context of such liquidity
event. A liquidity event includes any of: a) an initial public
offering of common shares or units of Parentco or a subsidiary of
Parentco, b) a reverse take-over by a publicly listed company of all
the issued and outstanding shares of Parentco or a subsidiary of
Parentco, or c) the sale of a majority of the issued and outstanding
common shares of Parentco or a subsidiary of Parentco representing a
change of control. The Convertible Debentures of Parentco will be
subject to certain restrictions on transfer, and a right of first
refusal in favour of Parentco. Subject to certain exceptions, the
Convertible Debentures of Parentco will not be redeemable prior to the
third (3rd) anniversary of the date of issuance thereof unless agreed to by the
holder, after which they will be redeemable, in cash, at the option of
Parentco at the principal amount plus all accrued and unpaid interest.
Howard Katz, President and CEO of Goldlund commented, "This agreement
provides Goldlund with the opportunity to substantially advance our
drill program in furtherance of a potential new resource estimate on
the Goldlund Project."
Commenting on the transaction, Michael Thompson, President & CEO of
Kesselrun stated, "We are extremely pleased to be making this
investment in the Goldlund Project. We believe that this project and
the surrounding land package have excellent exploration upside."
The terms of this transaction remain subject to the execution of a
definitive option agreement and related documentation, and the approval
of the TSX Venture Exchange.
About Kesselrun Resources Ltd.
Kesselrun Resources is a Thunder Bay, Ontario-based mineral exploration
company focused on growth through property acquisitions and
discoveries. Kesselrun's management team possesses strong geological
and exploration expertise with particular experience in Northwest
Ontario. For more information about Kesselrun Resources, please visit www.kesselrunresources.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this news
Forward Looking Statements - Certain information set forth in this news
release may contain forward-looking statements that involve substantial
known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, certain of
which are beyond the control of Kesselrun, Goldlund and Parentco,
including, but not limited to the impact of general economic
conditions, industry conditions, volatility of commodity prices,
dependence upon regulatory approvals, the execution of definitive
documentation, the availability of financing and exploration risk.
Readers are cautioned that the assumptions used in the preparation of
such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements.
SOURCE: Kesselrun Resources Ltd.
For further information:
Kesselrun Resources Ltd.
Michael Thompson, P. Geo., President & CEO
Adam Rabiner, Corporate Communications
604.868.7881 or 1.866.416.7941
Goldlund Resources Inc.
Howard Katz, President & CEO