The JV Agreement will also provide for Danakil Corp. to solely fund all expenditures of G&B (and any other group company of JVCo) until both (i) a scoping study is completed and (ii) it has funded project expenditures of US$7 million (the "Carried Expenditures"). After Danakil Corp. has funded such expenditures, EPC and Danakil Corp. will contribute to expenditures of G&B on a pro rata basis, subject to customary dilutive provisions in the event of any failure of a party to fund its pro rata contribution from time to time. Once a party's interest has been diluted to less than 10% (which can only occur following completion of a definitive "feasibility study" (within the meaning of National Instrument 43-101)), the interest shall be converted into a 1% royalty over sales revenue from potash received by the JVCo (and any other group company of JVCo).
Failure by Danakil Corp. to fund the Carried Expenditures will result in a claw-back of Danakil Corp.'s ownership interest in JVCo, on a pro rata basis (i.e. in order for Danakil Corp. to have maintained a 70% ownership interest in JVCo at the time of the first pro rata funding by the parties, it must have funded aggregate expenditures of at least US$10 million, inclusive of the US$3 million paid to acquire the G&B shares).
Full details of the transactions noted above will be set out in materials that will be mailed to all shareholders of EPC, as well as filed on SEDAR, once all regulatory approvals have been obtained (see section titled "EPC Shareholders Meeting" below).
Danakil Corp. is a wholly owned BVI subsidiary of Circum Minerals Ltd., incorporated to pursue mineral opportunities in Eastern Africa. As at the date of the Definitive Agreements, each of Circum and Danakil Corp. is at arm's length to EPC.
Restructuring of Outstanding Debt
Pursuant to the Definitive Agreements, EPC has assumed all outstanding debt of G&B incurred on behalf of EPC, or otherwise incurred by G&B, in connection with the Option (being CAD$1,972,630.79) and will arrange with creditors to have certain outstanding debt of EPC, including but not limited to a majority of the G&B debt to be assumed, satisfied by the issuance of common shares in the capital of EPC at a deemed price of CAD$0.10 per share (subject to TSXV approval) (the "Debt Restructuring").
EPC to Acquire Rights to New Potash Permits
Pursuant to the Definitive Agreements, EPC will acquire all of the issued and outstanding shares (the "Mali Share Purchase") of G and B African Resources Mali SARL ("G&B Mali"). G&B Mali is a subsidiary of PREM and the holder of certain rights to acquire potash exploration permits for a group of mineral substances in Mali. The area is known to have produced table salt (NaCI), other salts and Sylvite (KCI).
As consideration for the purchase of the G&B Mali shares, EPC will issue PREM 20,000,000 EPC common shares at a deemed price of CAD$0.10 per share.
PREM is a mineral exploration and development company of which ZRH is a principal shareholder, and George Roach and Pamela Hueston are directors. As a result, minority shareholder approval of the Mali Share Purchase may be required under applicable securities laws and the rules of the TSXV. As PREM is admitted to trading on AIM, the sale will need to comply with the AIM Rules and other regulatory requirements in the United Kingdom.
Proposed Name Change
It is proposed that EPC will (subject to shareholder approval) change its name to "AgriMinco Corp." or such other name as may be approved by the board of directors and/or the TSXV (the "Name Change").
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