Lara Signs Heads of Agreement to Sell Phosphate and Coal Interests
20 May 2014 - 9:30PM
Marketwired
Lara Signs Heads of Agreement to Sell Phosphate and Coal Interests
VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 20, 2014) - Lara
Exploration Ltd. (TSX-VENTURE:LRA) ("Lara" or the "Company") is
pleased to report that Lara and its partner Kiwanda Mines LLC
("Kiwanda") have signed a Heads of Agreement to sell certain rights
and options held by their Phosphate Alliance and Coal Alliance to
Australian Securities Exchange listed Phillips River Mining Limited
("Phillips River"). Lara understands that Kiwanda already owns
19.9% of Phillips River and, subject to completion of the proposed
transaction and a related financing, intends to use Phillips River
as the vehicle to pursue its interests formerly held by the two
Alliances.
Under the terms of the agreement, Phillips River will acquire
the following assets and options:
- Lara's 19.9% interest in central Colombian coal producer
Carbhid S.A.
- The Coal Alliance's option to earn a 51% interest in Escalones
mining rights owned and operated by Carbhid.
- The Coal Alliance's option to earn up to a 75% interest in the
Pelaya coal property in northern Colombia (the remaining 25% will
remain held by Lara).
- The Phosphate Alliance's option to acquire a 75% interest in
the Bifox phosphate mining rights in northern Chile (the remaining
25% will remain held by Lara).
- The option to earn a 75% interest in the Ki phosphate
exploration rights adjacent to the Bifox mining rights (the
remaining 25% will remain held by Lara).
For the coal assets, Phillips River will pay an amount
determined by an independent valuation which, after deduction of an
initial $450,000 payment to Lara, will be satisfied by the issuance
of shares of Phillips River (split 75% to Kiwanda and 25% to Lara)
at a deemed price of A$ 0.20 each. Of such shares, 60% will be paid
on closing and the remaining 40% will be paid on achievement of
production and resource establishment milestones. The amount
payable for the phosphate assets will also be determined by an
independent valuation, the first 50% of which will be paid on
closing and the remaining 50% of which will be paid on achievement
of production and resource establishment milestones. Phillips River
has also agreed to reimburse Lara $770,000 (inclusive of the
foregoing $450,000) of the costs incurred by Lara in acquiring and
maintaining these interests, with $200,000 paid on signing of the
Heads of Agreement and the remainder upon closing the transaction.
Phillips River will also assume the day-to-day costs of these
assets, effective immediately. Finally, Lara will have the right to
appoint one of the six directors comprising Phillips River's board
of directors.
Under the terms of the Alliance Agreements between Kiwanda and
Lara and which, as to Kiwanda's interests, will be assumed by
Phillips River, the Pelaya coal property, the Bifox phosphate
property and the Ki phosphate property will become Designated
Projects, whereby Phillips River will invest, in each project, US$5
million over a four-year period (US$ 1 million of which is a firm
commitment) in exploration and development to raise its interest to
65%. Phillips River may then raise its interest to a total of 75%
by delivering a Feasibility Study as defined by National Instrument
43-101 Standards of Disclosure for Mineral Projects of the
Canadian Securities Administrators within a further two years
(subject to spending a minimum of US$ 2 million per year).
About Lara
Lara is an exploration company following the Prospect Generator
business model, which aims to minimize shareholder dilution and
financial risk by generating prospects and then exploring them in
joint ventures funded by partners. The Company currently holds a
diverse portfolio of prospects and deposits in Brazil, Peru,
Colombia and Chile. Lara's common shares trade on the TSX Venture
Exchange under the symbol "LRA".
Neither the TSX Venture Exchange nor the Investment Industry
Regulatory Organization of Canada accepts responsibility for the
adequacy or accuracy of this release.
Lara Exploration Ltd.Chris MacIntyreVP Corporate Development+1
416 703 0010info@laraexploration.comwww.laraexploration.com
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