Vanstar Mining (VSR.V) and IAMgold (IMG.TO, IAG) have been discussing the deal structure for the Bousquet-Odyno property for a while and have now entered into a definitive agreement. As per the agreement, Vanstar can earn a stake of up to 75% in the project. An initial 25% stake will be obtained by spending at least C$2M in exploration expenditures on the project before March 11th 2024 where after Vanstar can earn an additional 50% stake (for a total of 75%) by spending an additional C$2M within four years after the effective date (which was March 11, 2022).
IAMgold has retained the right to back in and increase its ownership to 50% again by spending four times the amount spent on exploration after the initial 75% stake has been established. So if Vanstar spends the C$4M required to get to 75% and spends an additional C$1.5M before IAMgold exercises its back-in right, IAMgold would have to cough up C$6M to exercise its right to go back up to 50%. That sounds like a good deal but if IAMgold elects right away to get back up to 50% immediately after Vanstar completes the C$4M earn-in, Vanstar likely won’t see too much cash. But at that point a 50/50 joint venture will be established and both partners will contribute in equal parts to the exploration programs.
Vanstar is planning on hitting the ground running and as the project is fully permitted for drilling, VSR won’t waste any time and has budgeted for an initial 4,000 meter drill program starting in April. The April drill program will focus on the areas down plunge from the known high grade zones at Bousquet-Odyno.
Disclosure: The author has a long position in Vanstar Mining. Vanstar is a sponsor of the website. Please read our disclaimer.
