Wallbridge and Kirkland Lake Gold strike joint venture on Detour East Property

Kirkland Lake Gold has taken its investment in Wallbridge Mining to the next level. After the markets closed Monday, the two companies announced they have approved a deal focused on property that sits between the Detour Lake Gold Mine, owned by KL Gold, and the Fenelon exploration district largely dominated by Wallbridge. The idea is to expand the Fenelon Gold system and confirm the theory that Fenelon is an extension of the massive Detour deposit. 

KL Gold is already a major investor in Wallbridge and KL President Tony Makuch is a member of the Wallbridge board of directors. 

Former KL Gold chairman Eric Sprott is a major shareholder in both companies.

Wallbridge Mining Company announced that it has entered into a non-binding term sheet with respect to a joint venture of its Detour East gold property with Kirkland Lake Gold Ltd. Under terms of the joint venture, Kirkland can earn a 75% interest in Detour East by making expenditures totalling $35 million on the property.

“This Term Sheet, and ultimate joint venture agreement, is strategic for Wallbridge as it allows the Company to focus on fully-defining the size potential of our 100% owned Fenelon Gold property while at the same time advancing exploration on Detour East located at the far west end of the very large land position Wallbridge acquired through its acquisition of Balmoral Resources Ltd.,” stated Marz Kord, President & CEO of Wallbridge.

“The acquisition of Balmoral was primarily motivated by our belief that the Fenelon Gold system was larger than had been defined at that time, and that it extended onto Balmoral’s ground immediately adjacent to our original Fenelon Gold property. This belief has now been confirmed by our initial drill results west and south of Fenelon and will be our immediate exploration focus.  In addition, numerous other high priority targets on other areas of the recently acquired Balmoral ground, including the area around the Martinière deposit, also deserve exploration which Wallbridge will evaluate over the coming months. Entering into a joint venture with Kirkland on the Detour East will allow us to focus on the Fenelon gold system, and will bring us a high-quality partner with excellent knowledge of the regional geology through its Detour Lake operations, located adjacent to Detour East.”

Under the terms of the Term Sheet, Wallbridge will grant Kirkland the option to acquire up to an undivided 50% interest in the Property by funding phase 1 expenditures of $7.5 million over five (5) years (the “Phase 1 Expenditures”) with a minimum commitment of $2.0 million in the first two years ($0.5 million by the first anniversary and $1.5 million by the second anniversary of entering into a definitive joint venture agreement) (the “Option”). During the Option period, Kirkland shall have the right to act as Operator of the Property.

Upon satisfaction of the Option, Wallbridge and Kirkland shall have formed a joint venture (the “Joint Venture”) on Detour East with Kirkland acting as the operator of the Joint Venture (the “Operator”) to carry on operations with respect to the Property.

Upon the formation of the Joint Venture, Kirkland will hold the right to acquire an additional 25% interest in the Property by incurring additional expenditures of $27.5 million within the first five (5) years of the formation of the Joint Venture (“Second Stage Option Period”).

Upon Kirkland having incurred additional expenditures of $27.5 million during the Second Stage Option Period, Kirkland shall have earned an undivided 75% interest in the Property. The deemed expenditures on the property shall be Kirkland ($35,000,000) and Wallbridge ($11,666,667). Following the completion of the Second Stage Option Period, any additional funds required will be contributed by the Joint Venture parties based on their then proportional joint venture interests.  Should either Wallbridge or Kirkland (each a “Party” and collectively the “Parties”) elect not to fund a program, its Joint Venture interest will be diluted pro-rata. If a Party commits to fund a program, and fails to contribute its share of the funding, that Party’s Joint Venture interest will be diluted at three times the pro-rata rate.

If either Party’s Joint Venture interest is reduced to 5% or less, that Party’s Joint Venture interest shall be automatically converted to a 1% net smelter return royalty (the “NSR”) and the Joint Venture shall be automatically terminated.  The surviving Party shall have a right of first offer with respect to the purchase or sale of the NSR by the non-surviving party.

Prior to September 30, 2020, the Parties shall diligently and in good faith negotiate and enter into a definitive option agreement including customary representations, warranties and conditions. In addition to the entering into of definitive agreements, completion of the transaction is conditional upon receipt of all required consents and regulatory approvals including the approval of the respective Board of Directors of each party.

  

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