VANCOUVER, April 1 /CNW/ - LAGASCO CORP. ("Lagasco" or the "Company") is pleased to announce that it has entered into an agreement with Exploraciones Cori Condor S.A.C. ("ECC"), a private company based in Lima, Peru, to acquire all of ECC's interest in certain gold-silver properties (the "Anchaca Properties") located in the Choco District of southern Peru. The six concessions which comprise the Anchaca Properties have a combined total area of 2,140 hectares and are the subject of an option (the "CEDIMIN Option") to acquire the Anchaca Properties granted to ECC by CEDIMIN S.A.C. CEDIMIN S.A.C. is a private Peruvian company and is a wholly owned subsidiary of Minas Buenaventura S.A.A., Peru's largest publicly-traded precious metals mining company. The exercise price under the CEDIMIN Option, which expires October 13, 2010, is US$4 million.
Under the agreement with ECC, Lagasco will pay US$1 million to ECC in consideration of the grant of an option (the "ECC Option") over ECC's interest in the Anchaca Properties. On closing, Lagasco will grant ECC a 1.5% net smelter return royalty on mineral productions from the Anchaca Properties. If Lagasco exercises the ECC Option, it will issue common shares to ECC having a value of US$4 million at a price of not less than $0.15 per share.
Pursuant to the ECC Option Lagasco will have the exclusive right to acquire all of ECC's interest in the Anchaca Properties if certain conditions are met. ECC's interest is held pursuant to the CEDIMIN Option. US$800,000 of the consideration paid by Lagasco will be used to fund the cost of a work program in respect of Anchaca Properties. Lagasco will use the results of the work program to determine if it supports a decision to exercise the ECC Option. The ECC Option is exercisable by Lagasco up to 30 calendar days before October 13, 2010, being the expiry date under the CEDIMIN Option.
A finder's fee of up to 500,000 common shares of Lagasco, calculated in accordance with TSX Venture Exchange (the "Exchange") Policy 5.1, will be paid to Transmax Investing upon exercise of the ECC Option by Lagasco.
Lagasco is proposing that the grant of the ECC Option will form the basis of its reactivation application under Exchange Policy 2.6 and its subsequent graduation to Tier 2 of the Exchange. The transaction is scheduled to complete on or before May 31, 2010 and is subject to, amongst other things, Lagasco having completed a private placement financing of not less than Cdn$1.2 million, the negotiation and execution of Definitive Agreements, Exchange approval, and confirmation from the Exchange that the grant of the ECC Option will be sufficient for the proposed reactivation.
The CEDIMIN Option
CEDIMIN S.A.C. granted the CEDIMIN Option to ECC pursuant to a Mining Assignment Contract and Option to Transfer Mining Rights Agreement made October 14, 2005. Under the CEDIMIN Option, ECC is required to make US$2,300,000 of exploration expenditures over a four year period, including US$800,000 that is required to be expended in 2009/2010. Provided that ECC meets its exploration investment obligations, it will have the right to acquire a 100% interest in CEDIMIN's mining rights in respect of the Anchaca Properties. The term of the CEDIMIN Option is five years and can be exercised by ECC by paying an aggregate of US$4 million to CEDIMIN on or before October 13, 2010.
The ECC Option
ECC and Lagasco entered into a definitive letter agreement (the "Definitive Agreement") dated March 29, 2010. Under the Definitive Agreement, ECC agreed to grant the ECC Option to Lagasco for consideration of US$1 million, US$800,000 of which will fund a proposed work program. These expenditures will also satisfy ECC's exploration investment obligations under the CEDIMIN Option. Upon exercise of the ECC Option Lagasco will issue common shares to ECC having a value of US$4 million and will be obligated to make the US$4 million payment required for the exercise of the CEDIMIN Option. The ECC Option transaction will be completed, and the ECC Option will be granted, upon satisfaction or waiver of certain conditions precedent, including receipt of Exchange approval. The US$4 million of common shares of Lagasco may be subject to escrow provisions imposed by the Exchange.
The Anchaca Properties
The Anchaca Properties are comprised of six concessions having a total combined area of 2,140 hectares. Anchaca is located in the Andes of southern Peru, at altitudes of between 4,700 metres and 5,200 metres, in one of the world's most generously endowed mineral belts. A number of high- to very high-grade mineral occurrences have been explored by means of trenching, mapping and sampling. The work program being undertaken by ECC and Lagasco will continue this exploration work and a National Instrument 43-101 compliant technical report will be available for review prior to completion of the grant of the ECC Option.
About Lagasco Corp.
Lagasco is traded on the NEX board of the TSX Venture Exchange. The acquisition of an interest in the Anchaca Properties will form the basis of Lagasco's application to graduate to the TSX Venture Exchange as a Tier 1 or Tier 2 listed company.
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 release.
SOURCE LAGASCO CORP.
For further information: For further information: D. Barry Lee, Chairman of the Board, (604) 689-8336