VANCOUVER, Jan. 23, 2012 /CNW/ - Gitennes Exploration Inc. (TSXV-GIT) announces that it has signed a Memorandum of Understanding (the "MOU") with AndeanGold Ltd. that grants AndeanGold the right to acquire an additional 40% interest in the Urumalqui Project. This right is in addition to the existing Option Agreement dated April 21, 2010 (which will remain in effect) that grants AndeanGold an option to earn a 60% interest in the Project.
The MOU contemplates that a formal Agreement will be entered into between Gitennes and AndeanGold so that AndeanGold may acquire indirect control of the Peruvian subsidiary that is the titleholder of the Project's concessions once it has vested its option to earn 60%. If AndeanGold should elect not to exercise the second option to increase its interest in Urumalqui to 100% then control of the subsidiary will remain with Gitennes,
Also, should AndeanGold elect to not meet the terms of the original option to acquire a 60% interest then both the original option and this second option will terminate and ownership of Urumalqui will revert to Gitennes and AndeanGold will have no residual interests.
Terms of the MOU require that AndeanGold will make the following firm and optional payments :
|Cash Payments||Share Issuances|
|On Signing the MOU||$125,000|
|On Signing the formal Agreement||$125,000||200,000|
|On or before 6 months from signing the Agreement||$250,000||200,000|
|On or before 12 months from signing the Agreement||$ 350,000||250,000|
|On or before 18 months from signing the Agreement||$400,000||250,000|
|On or before 24 months from signing the Agreement||$500,000||500,000|
|On or before 30 months from signing the Agreement||$1,000,000||600,000|
If AndeanGold chooses to exercise both options then Gitennes will be entitled to a 1% Net Smelter Returns Royalty on the Project with total payments limited to $1,250,000.
This transaction is subject to acceptance by the TSX Venture Exchange and, if required, the approval of Gitennes' shareholders.
Terms of original Option Agreement:
In April 2010 Gitennes signed an option agreement with AndeanGold whereby the Company granted it the right to earn a 60% interest in the Urumalqui project. In order to earn its interest AndeanGold must spend $3,000,000 in qualifying exploration expenditures on the project over a four-year term, which shall include a minimum of 3,000 metres of drilling by the end of the second year and 7,000 metres of cumulative drilling by the end of the third year. AndeanGold must also issue 80,000 shares to the Company in four tranches of 20,000 shares each. Gitennes may elect to receive cash in lieu of shares, with the amount not to exceed $25,000, $50,000 and $100,000 with respect to the first, second and third year anniversary date payments, respectively. If the market value of the shares on the respective payment dates exceeds the maximum cash payment amount on such date, the difference will be paid in equivalent shares.
Upon AndeanGold exercising the option a joint venture will exist in which ownership will be 60% AndeanGold and 40% Gitennes. Subsequent activities will be funded on a 60:40 basis; failure to contribute will result in pro rata dilution until the interest is reduced to 10% at which time the non-contributing party converts to a 2% Net Smelter Returns Royalty.
Information about all of Gitennes' projects may be found by visiting www.gitennes.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 release.
DISCLAIMER: This news release includes certain statements, other than historical information, that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, including, without limitation, statements regarding future plans and objectives of the companies are forward-looking statements that involve various risks and uncertainties. Although Gitennes believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include general economic, market or business conditions, and other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Mineral exploration and development of mines is an inherently risky business. Accordingly the actual events may differ materially from those projected in the forward-looking statements. Historical information necessarily is not current and is provided for your reference only. No warranty whatsoever is made that any of the historical information is accurate, precise, or up-to-date. For more information on Gitennes and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.com.
This press release does not constitute an offer to sell or a solicitation to buy any of the securities of Gitennes in the United States.
For further information:
604 682 7970