Tuesday, 6 March 2012

Xmet expedites option agreement with Globex for 100% of Duquesne-Ottoman

Xmet (CVE:XME) said Monday it has moved to acquire the remaining 25 percent stake of Duparquet Assets Ltd, under a new $9.0 million option agreement with Globex Mining Enterprises (TSE:GMX).
Duparquet Assets, a 50-50 joint venture (JV) between Globex and Geoconseils, owns the Duquesne West and Ottoman Fault properties in the Abitibi region of Quebec.
The original option agreement saw Xmet acquire just 75 percent of the assets. However, under the terms of the new option agreement, Xmet can acquire 100 percent of the Duparquet company, in exchange for one of two cash payment scenarios.
Xmet CEO, Alexander Stewart, said: "After nearly two years of efficient and successful Gold discovery on the Duquesne-Ottoman Project, management saw the need to accelerate our option payments and acquire the right to the final 25% interest in order to create a clear path to 100% ownership of Duquesne-Ottoman as soon as possible.
"Xmet's technical achievements on the Project have not translated into increased stock value. This New Option Agreement is designed to remedy this situation and align Xmet's valuation with our peer group who 'own' their gold.
"We are confident that this new option agreement will create an immediate path to ownership that should give us improved multiples on our per ounce resource that translates into increased shareholder value."
Xmet can pay either a single cash payment of $9.0 million within six months of signing the new agreement, subject to a sliding scale gross metal royalty (GMR) of up to three percent; or a single cash payment of $6.5 million within six months of signing the new agreement, plus one of four payment options.
Those options will see Xmet pay either $2.5 million in cash within one year of the agreement, $2.6 million in cash within two years of the agreement, $2.7 million in cash within three years of the agreement, or $2.8 million in cash within four years of the agreement.
Should Xmet choose not to make one of these four payment options, Globex and Geoconseils will retain a 25 percent carried interest in the company, plus the three percent GMR. If this option is carried out, Globex and Geoconseils will commence pro rata contributions toward production, following the delivery of a bankable feasibility study by Xmet.
The new agreement eliminates Xmet's obligation to carry out another $6 million in work obligations over the next four years, as well as its annual five percent of carrying costs.
In October 2011, Xmet reported an NI 43-101 compliant inferred resource of 4.17 million tonnes at an average grade of 5.2 g/t gold at the property, hosting 727,000 ounces of gold. The report was prepared by Watts, Griffis, McOuat Ltd.
Xmet said it has completed 9,000 metres of its fully funded 13,000-metre phase two diamond drilling program on Duquesne-Ottoman, which aims to expand the resource beyond the current compliant amount.

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