Eagle Plains Resources (EPL.V) has signed six individual option agreements with Xcite Resources (XRI.V) whereby the latter can earn up to an 80% interest in six uranium projects. Those six projects contain a total land package of almost 6,000 hectares, located near Uranium City in Saskatchewan.
Xcite Resources will have to spend C$3.2M on exploration, issue 750,000 common shares to Eagle Plains and make cash payments totalling C$55,000 over four years. Those amounts are per project which means that if Xcite Resources would go ahead with all six projects, Eagle Plains will see C$19.2M in exploration and receive C$330,000 in cash as well as 4.5 million shares. Of course it is unlikely all six projects will meet Xcite’s standards (or its ability to fund the required expenditures) but in any case it does look like Eagle’s new partner will be spending some cash in the next few years to advance the projects.
Upon reaching an 80% stake in any of the projects, both companies will form an 80/20 joint enture whereby Eagle Plains’ 20% stake will be a carried interest until a bankable feasibility study has been published. Additionally, Eagle Plains will retain a 2% Net Smelter Royalty on all properties.
This is an excellent deal for Eagle Plains. Signing six individual agreements at those terms is advantageous as Xcite will be required to spend millions of dollars before it will likely zoom in on the best of the six projects. Meanwhile, the company will retain exposure thanks to the Xcite-shares it will receive. Additionally, Eagle Plains will be the operator of exploration program and will likely earn a management fee for those services.
And now it is up to Xcite Resources to actually raise the money and design the first few exploration programs.
Disclosure: The author has no position in Eagle Plains Resources. Eagle Plains is a sponsor of the website. Please read the disclaimer.
