Argentina-focused mining company Marifil Mines (CVE:MFM) announced Friday that it has signed a definitive letter of intent with Saccharum Energy Corp (CVE:SHM), under which the two companies will form a joint venture.
The revised agreement, which cancels out the terms set out in the first letter announced last December, allows Saccharum to earn a 70% interest in Marifil's K-2 potash property in Neuquen Province, as well as the K-3 and K-4 potash properties in Mendoza Province, each in Argentina.
To earn the interest in all three properties, Saccharum must pay Marifil $1.5 million in cash, nine million shares of Saccharum common stock and conduct at least $12 million in exploration work on the property.
Saccharum must also purchase all shares of Oxbow Holdings Corp, Marifil's subsidiary, for $366,481. Oxbow shareholders can accept cash or Saccharum shares at a rate of $0.50 each.
Marifil, based in Vancouver, B.C., will retain a 1.5% net smelter royalty, which Saccharum may purchase for $15 million. Additional cash and share payments must be made for each property every year for a period of three years.
Saccharum, out of Calgary, Alberta, plans to spend $4 million in work throughout the next three years.
Both Marifil and Saccharum have agreed to incorporate these terms into a binding joint venture by mid-July.