Details of the Acquisition
Within five (5) business days of ARL's acceptance of the letter agreement, ALX shall make a non-refundable $3,000 cash payment to ARL. During the period of forty-five (45) days from ARL's acceptance of this letter agreement (the "Due Diligence period") ALX shall have the exclusive right to conduct due diligence on the Project, at its sole discretion and expense.
ALX and ARL have agreed to settle the terms of a definitive agreement incorporating the terms and conditions of the letter agreement within a 45-day period following the conclusion of ALX’s due diligence. The definitive agreement will provide ALX the option to earn up to an 80% interest in the Project over a four (4) year period from the effective date of the definitive agreement in consideration for: (a) cash payments totaling $150,000, (b) the issuance of common shares of ALX to ARL totaling 1,500,000 common shares; and (c) ALX incurring eligible expenditures totaling $1,250,000 with respect to the Project, as further described below.
ALX can initially earn at its option a 51% interest in the Project (the "First Option"), by meeting the following schedule of conditions:
- Within five (5) days of the later of (a) execution of the Definitive Agreement by both parties and (b) ALX's receipt of required acceptance from the TSX Venture Exchange (“TSXV”) for the issuance of common shares and consent to the Definitive Agreement, ALX shall make a $12,000 cash payment and issue 250,000 common shares to ARL;
- On or before December 31, 2021, ALX shall make a $25,000 cash payment and issue an additional 250,000 common shares to ARL;
- On or before December 31, 2022, ALX shall make a $30,000 cash payment and issue 250,000 common shares to ARL; and
- ALX shall incur expenditures of at least $500,000 at the Project.
ALX can earn an additional 29% interest in the Project (the "Second Option"), to earn a cumulative 80% interest in the Project, by meeting the following schedule of conditions:
- On or before December 31, 2023, ALX shall make an additional $35,000 cash payment and issue an additional 250,000 common shares to ARL;
- On or before December 31, 2024, ALX shall make an additional $45,000 cash payment and issue an additional 500,000 common shares to ARL; and
- ALX shall incur additional expenditures of at least $750,000 at the Project.
ALX, at its option, can accelerate the cash payments and common share issuances described above.
Any excess eligible expenditures incurred on the Project within an earn-in time period will be credited to successive earn-in time periods. Any deficiency in the amount of eligible expenditures incurred can be satisfied by a cash payment made by ALX to ARL equal to the deficiency on or before the applicable due date. All common shares issued by ALX will be subject to a 4-month hold period as per Canadian securities laws.
Upon ALX obtaining an 80% interest in the Project (by exercise of both the First Option and the Second Option), ALX and ARL shall form a joint venture in respect of the development of the Project (with ALX as operator), with the terms of the joint venture agreement to be negotiated in good faith between the parties. Alligator is subject to an underlying 2.5% net smelter returns royalty (“NSR”) on the sale of valuable minerals from the Project.
ALX’s acquisition of up to an 80% interest in Alligator is subject to (i) completion of a due diligence review of the Project, to ALX’s sole satisfaction, (ii) approval by the Board of Directors of ALX of the terms of a transaction for the Project, and (iii) acceptance of the definitive agreement by the TSXV.
The Project is underlain by Precambrian Shield rocks of the Central Metavolcanic Belt (“CVB”), part of the La Ronge Domain. Northeast-striking and steeply northwest-dipping upper greenschist to lower amphibolite facies ultramafic to mafic metavolcanic rocks of the CVB are intruded by ultramafic to mafic sills. These ultramafic to mafic rocks are structurally underlain by similarly northeast-striking and northwest-dipping meta-arkose and calcareous metagreywackes of the McLennan‐Sickle Group.
The dominant structural feature at Alligator is the Byers Fault, which strikes in a northeasterly direction and dips to the northwest. The Byers Fault can be traced along the southeast shore of Alligator Lake and through a series of muskeg and small lake-filled topographic lows. The Byers Fault is recognized as a “first‐order” controlling structure for many “second‐order” quartz‐sulphide‐carbonate healed shear and tensional vein type gold deposits and occurrences in the greater Waddy Lake area (Schwann, 1991). In the Waddy Lake area, however, the Byers Fault trends approximately east‐west before stepping/flexing into a more northeasterly trend in the Contact Lake-Alligator Lake area. Large‐scale “bends” in fault systems are known to be the preferential location for dilatancies that could host gold-bearing quartz vein swarms.