VANCOUVER, June 19, 2014 /CNW/ - Discovery Harbour Resources Corp. (TSXV:DHR) ("Discovery" or the "Company") announces that Northern Shield Resources Inc. ("Northern Shield") (TSXV:NRN), has sold its 49% interest in the Wabassi Joint Venture (the "Wabassi JV") and its 59% interest in the joint venture for the neighboring Max property (the "Max JV") to Great Lakes Resources LLC ("Great Lakes"), a private US based company, and has granted Great Lakes a first right of refusal to acquire its 100% interest in the Storm Property (the "Storm Rights"). As a result of this acquisition by Great Lakes, the interests in the Wabassi JV are held by the Company (51%) and Great Lakes (49%) and the interests in the Max JV are held by Great Lakes (59%) and by Rainy Mountain Royalty Corp. (TSXV:RMO) (41%).
On completion of this purchase by Great Lakes, the Company was granted an option (the "Option") by Great Lakes to acquire a 49% interest in the Wabassi JV, a 59% interest in the Max JV and the Storm Rights. The Option may be exercised by the Company paying $2,605,684 plus 8% accumulated interest thereon, compounded monthly, by June 18, 2015. If the Option is exercised by the Company, the Company will acquire a 49% interest in the Wabassi JV which would make the Company the 100% owner of the Wabassi Property, a 59% interest in the Max JV and the Storm Rights, all subject to the NRN Wabassi Royalty (as defined below) and the NRN Max Royalty (as defined below).
As part of purchase transaction between Great Lakes and Northern Shield, Great Lakes granted Northern Shield a 0.5% net smelter returns royalty from the Wabassi property (the "NRN Wabassi Royalty") and a 0.6% net smelter returns royalty from the Max property (the "NRN Max Royalty"). Half of each of the NRN Wabassi Royalty and NRN Max Royalty may be purchased by the royalty payor paying $750,000 to Northern Shield at any time on or before June 18, 2019, or by paying $1,500,000 thereafter in respect of each royalty.
In addition, the Company, Great Lakes and Northern Shield have agreed with respect to each of the Wabassi JV and the Max JV, that if Great Lakes' participating interest in each of these joint ventures is diluted below 10% before the Option is exercised by the Company, then: (i) the NRN Wabassi Royalty and NRN Max Royalty will be terminated, and (ii) the 2.0% net smelter returns royalty that would otherwise be payable to Great Lakes under the terms of the joint venture agreements for such properties, shall be replaced with: (a) a 1.5% net smelter returns royalty payable to Great Lakes, which the Company shall have the pre-emptive right to reduce from 1.5% to 0.75% by paying Great Lakes $700,000, and (b) a 0.5% net smelter returns royalty payable to Northern Shield, which the Company shall have the pre-emptive right to reduce from 0.5% to 0.25% by paying Northern Shield $300,000. Also, in connection with these transactions, the Company has granted Northern Shield a limited non-exclusive license to use and access the Wabassi camp in consideration for certain rental fees and consumable fees. It is expected that the Company will continue as operator of the Wabassi JV.
"Completion of this transaction marks the first step toward the Company's strategic goal of consolidating the Wabassi District under a single entity. It is important to remember that Wabassi is not a single project, but a previously undiscovered district. We will now turn our attention to integrating our efforts with those of the Province of Ontario, First Nations and private companies to develop access and infrastructure to support development of the Ring of Fire mineral province. The Wabassi Joint Venture holds over 12 kilometers of right of way along southern portion of one of the proposed access routes. Improved access is key to lowering our exploration costs and improving the overall development profile of the Wabassi District.," stated Bruno Hegner, President and CEO of the Company.
Great Lakes is a private US company controlled by Richard B. Gilliam, a director and significant shareholder of the Company. The Company's exercise of the Option remains subject to approval of the TSX Venture Exchange ("TSXV") and, if required, approval of the shareholders of the Company.
ON BEHALF OF THE BOARD OF DISCOVERY HARBOUR RESOURCES CORP.
"Bruno Hegner" Bruno Hegner
President, CEO and Director
Disclaimer for Forward-Looking Information
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" occur. Forward-looking information in this press release includes, but is not limited to, statements regarding expectations of management regarding: (i) the Option, (ii) TSXV and shareholder approval of the Option, (iii) the operations of the Wabassi JV and Max JV, and (iv) the royalties related to the Wabassi property and Max property. Although the Company believes that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Such forward-looking statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements including, without limitation, the risks that: (1) the Company may not be able to exercise the Option for any reason whatsoever, (2) the TSXV, and if required, the shareholders of the Company, may not approve the exercise of the Option for any reason whatsoever, and (3) the royalties may not be paid or repurchased as set forth in this news release for any reason whatsoever. Except as required by law, the Company does not intend to update these forward-looking statements.
Neither 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 release.
SOURCE: Discovery Harbour Resources Corp.
For further information: contact Kieran Magee by telephone at (604) 689-1799 or by fax at (604) 689-8199.