Canadian natural resources firm Power Group Projects Corp (TSX-V: PGP) has signed a letter of intent to buy all of the outstanding shares in fellow Canadian explorer 1315843 B.C. Ltd.
PGP’s letter of intent was brokered by Cloudbreak Discovery Plc (LON: CDL), a London-listed mining project generator, as part of its co-operation with 1315843 B.C. on the Atlin West gold and silver project in British Colombia. The two firms are looking to resurrect precious metals production at the site which was in production during the 1920’s and 1930’s, and at the time produced more than 18,000 ounces of gold and 9,000 ounces of silver.
Cloudbreak and 1315843 B.C. became exploration partners in August and as part of the agreement the Canadian explorer committed to spend up to CAD$700,000 in exploration on Atlin, of that at least CAD$150,000 during the first year.
Power Group Projects to issue 8m common shares to Cloudbreak Discovery
The company also agreed to issue 8,000,000 common shares and make aggregate payments of CAD$325,000 to Cloudbreak over a three year period in return for a 100% interest in Atlin. Cloudbreak still plans to retain a 2% net smelter royalty on the polymetallic project.
Kyler Hardy, CEO of Cloudbreak Discovery, said, “We are pleased to see the management of 1315843 B.C. entering into this agreement with Power Group Projects. Having the resulting issuer listed on the TSX-V will greatly aid in securing additional capital for the advancement of the projects and we believe the management of PGP will be exceptional partners to have on this asset.”
According to the proposed transaction PGP would acquire all of the outstanding share capital of 1315843 B.C. and, if a definitive agreement is signed, PGP would issue 24,000,000 common shares to 1315843 B.C. shareholders. PGP also committed to make a refundable cash payment of CAD$50,000 which will be released on signing of a definitive agreement and an additional CAD$50,000 cash payment released after the closing of the proposed transaction.
Deal has entered due diligence phase
Power Group Projects, formerly known as Cobalt Power and listed on the TSX Venture Exchange, is currently trading at CAD0.05, down from this year’s peak of CAD$0.130 in June. The firm holds interests in the mineral properties in Saskatchewan such as Brownell Lake Property as well as Laurier Graphite Property in Ontario, Proteus property and Smith Cobalt.
Cloudbreak, which changed its name from Imperial X Plc in June, looks at mining assets in Canada, the US, West Africa and Europe that are either currently not owned or have been on hold for a while and identifies those that may lend themselves for future investment. It then looks for a strategic partner such as Power Group Projects in the case of Atlin, which can move a project forward.
The firm generates revenue from the royalty, equity and a cash component of those assets.
Listen: Podcast with Kyler Hardy, CEO of Cloudbreak Discovery