Fremont can acquire 100% of Cobb Creek by making payments totalling US$370,000 over nine years from September 27, 2019 (the “Effective Date”) and issuing 1,500,000 common shares of Fremont (“Fremont Shares”) to Clover. In addition to the payments to Clover, Fremont will assume responsibility for making payments totaling US$120,000 over four years to a previous underlying property owner (“Underlying Owner”). Lastly, Fremont will reimburse Clover for the related 2019-2020 land maintenance costs, and a portion of the 2018-2019 payments to the Underlying Owner. Fremont will be responsible for making all such future payments in order to keep the Option Agreement in good standing.
Fremont may accelerate the exercise of the Option Agreement and acquire 100% of Cobb Creek at any time by giving Clover ten days’ notice and paying all of remaining payments in full.
Clover will retain a 2.0% net smelter return royalty on Cobb Creek and any new claims located within one-half mile of Cobb Creek. Fremont has the right to buy-down 1.0% of the royalty for US$2,000,000.
1The historical mineral resource estimate (“Historical Estimate”) was performed by and reported in a technical report prepared by Michael R. Pawlowski for Stacatto Gold Resources Ltd. and dated October 30, 20043. The Historical Estimate is based on a total of 72 drill holes with continuous zones of gold assays above 0.01 opt gold that could be reasonably interpreted to be continuous in three dimensions based on the construction of nine cross sections, 200 feet apart. The methodology employed in the Historical Estimate is detailed in the 2004 technical report by Pawlowski3. A qualified person has not done sufficient work to classify the Historical Estimate as a current mineral resource or mineral reserve and Fremont is not treating the Historical Estimate as a current mineral resource or mineral reserve. In order to consider the Historical Estimate as current mineral resources or mineral reserves, Fremont needs to retain a qualified person to verify historical drilling and assaying methods and validate historical results, add any drilling and assaying or other pertinent geological information generated since the last estimation, and complete an updated resource estimate and a new technical report.
2Muntean, J.L., Davis, D.A., and Ayling, B., 2017, The Nevada Mineral Industry 2015, Special Publication MI-2015, Nevada Bureau of Mines and Geology.
3Pawlowski, M.R., 2004, Technical report on the Cobb Creek Property, McCall Area, Elko County, Nevada.