Helio Resource Corp (HRC.V) and Solomon Resources (SRB.V) have announced they signed a letter of intent whereby Solomon Resources can earn a 60% stake in the Damara gold-tin project in Namibia, Africa. As per the indicative terms of the agreement, Solomon can earn an initial 51% interest in Damara in the next three years by issuing 15 million shares to Helio and incurring C$1.5M in exploration expenditures.
Should Solomon want to increase its stake to 60%, it will have to spend another C$1.5M on the ground in year four of the agreement and issue another 5 million shares to Helio. If this requirement is met, both companies will move forward in a 60/40 joint venture.
This seems to be a good deal as Helio will receive 20 million Solomon shares and doesn’t have to incur any expenses in the first few years at Damara. As Helio’s focus is on its Tanzanian gold project, we consider this move to find a joint venture partner for Damara to be a smart decision.
Disclosure: The author holds no position in Helio or Solomon. Please see our disclaimer for current positions.