Renaissance Gold Inc. (CVE:REN) said on Monday it has signed a Letter of Intent with Kinross Gold U.S.A., Inc. (NYSE:KGC) which could grant Kinross the option to acquire a 70% interest in the Spruce East, Diamond Point, and Buffalo Canyon exploration projects located in Nevada within 10 years.
The Spruce East and Diamond Point projects in Elko County were recently acquired by RenGold and Buffalo Canyon in Nye County is drill permit ready. Each project will be subject to a separate exploration earn-in agreement.
Kinross will advance RenGold $500,000 to carry out and conduct exploration for the first agreement year among the three projects, as directed by Kinross. Subsequent years will have increasing minimum expenditures for each project of $200k, then $300k, and finally $500k per year through year 10, totaling $4mln to vest an undivided 70% interest in each project. Kinross may accelerate vesting by spending $5mln before the end of the seventh year.
Kinross will subscribe for such number of common shares in the capital of RenGold, amounting to no less than 5% and not more than 9.9% of the issued and outstanding shares of RenGold at a price of C$0.33 per share. The private placement and any modification to it are subject to compliance with applicable securities laws and to receipt of regulatory approval. The proceeds from the private placement will be used by RenGold for general corporate purposes.
In addition, RenGold will grant to Kinross for a period of not more than three years a Right of First Refusal (ROFR) to acquire new projects developed by RenGold under arms-length terms in a defined area of Nevada. The ROFR can be used a maximum of three times within the three years of the agreement.
“This agreement provides an excellent opportunity to accelerate the exploration of three properties in the RenGold portfolio. A total of 6 projects out of 15 are now in earn-in agreements with industry partners. It is anticipated that all three projects will see some drilling this year and, based on outcomes, aggressive follow-up may be warranted,” said Ronald Parratt, President and CEO.
“We're pleased with the confidence placed in RenGold by Kinross and it is a pleasure to add a company such as Kinross to our shareholder list. They will be the fourth major mining company to hold an interest in the Company."