Austral Gold Limited Signs Letter of Intent to Option its Calvario-Mirador Copper Projects to Colossus Resources Corp
unless and until Colossus obtains shareholder approval for the constitution of the Austral Group as a control person, and Colossus will agree to seek such approval. Contingent Payment: If a pre-feasibility study is prepared in respect of the Projects, Colossus shall issue to Austral Group 2 million common shares of Colossus, provided that if as a result of such issuance the percentage interest of the Austral Group would exceed 19.9% Colossus will seek the approval for the constitution of Austral Group as a control person and until such date the parties shall defer a portion of the share issuance such that they maintain the Austral Group's percentage interest in Colossus at or below 19.9%. Anti-Dilution Rights and Participation Rights: Colossus will grant to the Austral Group an anti-dilution right so that Austral Group's interest in Colossus remains at 19.9% through the raising of USD 3.8 million, inclusive of the USD 2.5 million exploration expenditures on the Projects above mentioned, as well as pre-emptive rights to participate, pro rata, in future financings of Colossus until the third anniversary of the closing date. Cash: USD 100,000 on executing the letter of intent as consideration for Austral granting Colossus the exclusive right to receive the Option until May 30, 2023. If the definitive agreement is not entered into by the parties by May 30, 2023, or such later date as is agreed upon by the parties, Austral Group has agreed to refund USD 37,500 to Colossus. Board Representation and Technical Committee: Austral is to have the right to appoint one person to the Colossus Board for as long as it holds at least 10% of Colossus's outstanding shares. Austral is also to have the right to appoint 2 out of 4 members of the Colossus Technical Committee. Royalties: Austral is to retain its option to purchase half of the existing net smelter return royalties over base and precious metals in respect of the Calvario and Mirador projects. The parties expect to enter into a definitive agreement and grant the Option on or before the Agreement Deadline, at which time the Austral Group would become the largest individual shareholder of Colossus.