Quimbaya Gold (QIM.C) has announced it has entered into an option agreement with 37 Capital (JJJ.C) whereby the latter is entitled to acquire the non-core Berrio project in Colombia’s Antioquia department.
The US$3.75M total consideration consists of a US$100,000 cash non-refundable deposit and an additional US$150,000 cash deposit during the option period of twelve months. If or when 37 Capital effectively exercises the option to acquire full ownership of Berrio, it will issue 7.6M of its own shares to Quimbaya Gold, which will obtain a 19.9% equity stake in 37 Capital. This will ensure Quimbaya Gold can participate in potential exploration successes at Berio through its equity stake in 37 capital.
The 7.6M shares at a deemed price of C$0.10 will represent just over US$0.5M of the purchase price, and the remaining US$3M will be payable in cash.
This seems like a good transaction from the perspective of Quimbaya Gold: the company can continue to focus on its Tahami land package while 37 Capital works on the Berrio project. And even if 37 Capital would walk away from the option agreement, Quimbaya Gold will likely make a few hundred thousand dollars on the non-refundable interim payments.
Our focus remains on Quimbaya’s Tahami Center drill program, where a copper porphyry system is being targeted by the drill bit. We hope to see assay results in the next few weeks.
Disclosure: The author has no position in Quimbaya Gold. Quimbaya is a sponsor of the website. This post is for educational purposes only; be mindful investing in junior mining stocks is risky and you may lose your entire investment if things go wrong. Please read the disclaimer.
