Emgold has completed an assignment agreement allowing it to acquire up to an 91% interest in the Casa South Property, QC.  The Property comprises 180 active mining titles covering a total of 10,061 hectares (100 square kilometers).  It extends immediately south of Hecla Mining Corporation’s Casa Berardi Mine operation and extends laterally for 20 kilometers covering different sub-parallel structures corresponding to a distinct geophysical signatures and hosting elevated gold values in soil anomalies. Casa Berardi Mine has produced approximately 1.9 million recovered gold ounces since commencing production in 1988, including 931,244 recovered ounces since production started in 2006 (Source: Hecla Mining Corporation website)

SUMMARY

On December 15, 2018, Emgold announced by press release that it it has completed an assignment agreement (the “Assignment Agreement”) with a third party, a privately held company, (the “Assignor”) granting Emgold (the “Assignee”) its rights, held through a binding Letter of Intent (“LOI”) with Greg Exploration Inc. and Affiliates (the “Vendors”), to acquire up to a 91% interest in the Casa South Property, Quebec (the “Property”), as more fully described below. Closing of the transaction (“Transaction”) is subject to various conditions, including but not limited to completion of a definitive option agreement (“Definitive Agreement”) between Emgold and Vendors and TSX Venture Exchange (“Exchange”) approval. All currency amounts in this press release are in $CDN. The Transaction is an arms-length transaction.

The Property comprises 180 active mining titles covering a total of 10,061 hectares (100 square kilometers). It extends immediately south of Hecla Mining Corporation’s Casa Berardi Mine operation and extends laterally for 20 kilometers covering different sub-parallel structures corresponding to a distinct geophysical signatures and hosting elevated gold values in soil anomalies.

Casa Berardi Mine has produced approximately 1.9 million recovered gold ounces since commencing production in 1988, including 931,244 recovered ounces since production started in 2006 (Source: Hecla Mining Corporation website). Note that the presence of mineral resources and reserves found on the Casa Berardi Mine Property do not guarantee discovery or delineation of of mineral resources and reserves on the Casa South Property.

LOCATION AND OWNERSHIP

The Property is located approximately 80 kilometers north of the town of La Sarre, Quebec or 105 kilometers west south-west of Matagami in the Casa Berardi township, James Bay Municipality. It is located south of the Casa Berardi Mine, owned and operated by Hecla Mining Corporation. It is accessible going north from La Sarre via Casa Berardi Mine’s all season gravel road. The Property consists of 180 active mining titles covering a total of 10,061 hectares. The claims are in one contiguous block.

Terms of the Assignment Agreement

Pursuant to the Assignment Agreement, Emgold has agreed to acquire the rights, held through the LOI executed between the Assignor and the Vendors, in exchange for 2,000,000 common shares of the Company (the “Shares”) to be issued to the Assignor, granting Emgold the option to acquire up to a 91% interest in the Property. The Shares to be issued to the Assignor will be subject to a minimum statutory hold period of 4 months from the date of issue.

Terms of the Letter of Intent

Emgold’s assumption of the rights held through the LOI allows Emgold the option to acquire up to a 91% interest in the Property under the following terms. During the option period (the “Option Period”), Emgold will be required to make cash payments to the Vendors as shown in Table 1.

Emgold will be required to complete $600,000 in exploration expenditures (“Exploration Expenditures”) in Year One of the Option Period. Emgold will be required to make an additional $1,000,000 in Exploration Expenditures during the course of the Definitive Agreement, without any commitment as to amount and timing of amount to be spent. Exploration Expenditures shall include, but not be limited to, cash payments made to the Vendors, claim fees, property taxes, exploration expenditures, permitting expenditures, reclamation expenditures, payments made to First Nations, holding costs, legal costs, and reasonable administrative costs. Excess expenditures, made in a given year, will be credited to future years of exploration of the Property.

Emgold shall have the right to accelerate the exercise of the Option and consequently reduce the Option Period by concurrently accelerating the aforementioned cash payments and Exploration Expenditures. Should Emgold decide to accelerate such cash payments and Exploration Expenditures, Emgold will be entitled to a 20% discount on the contemplated annual cash payments to be made, as described hereinabove.

For the purpose of the Transaction, Emgold will establish a subsidiary company (the “Subsidiary Company”), being understood that such Subsidiary Company shall become the beneficial owner of the LOI and, upon its completion, the Definitive Agreement. Upon establishing the Subsidiary Company, the Property will be transferred into the name of the Subsidiary Company.

The Vendors will be allocated a number of common shares (“Subsidiary Shares”) in the share capital of the Subsidiary Company equal to 9% of the then issued and outstanding share capital of said Subsidiary Company. The Vendors’ Subsidiary Share allocation in the share capital of the Subsidiary Company shall be increased should Emgold not complete the total amount of Exploration Expenditures of $1,600,000 in the following manner:

i. If Exploration Expenditures spent on the Property are totaling $1,600,000, the Vendors shall be entitled to the prescribed nine percent (9%) allocation of Subsidiary Shares in the Subsidiary Company;

​ii. If Exploration Expenditures spent on the Property are totaling $1,100,000, the Vendors shall be entitled to an increased fourteen percent (14%) allocation of Subsidiary Shares in Subsidiary Company; and

iii. If Exploration Expenditures spent on the Property are totaling $600,000, the Vendors shall be entitled to an increased nineteen percent (19%) allocation of Subsidiary Shares in Subsidiary Company.

Prior to completion of the Option, the Subsidiary Shares held by the Vendors shall be non-dilutable. Following completion of the Option, the Subsidiary Shares shall become dilutable. Emgold shall have first right of refusal to acquire any Subsidiary Shares from the Vendors, should they elect to sell them. mgold shall grant to the Vendors a 1.5% Net Smelter Royalty (“NSR”) on the Property, being agreed that half a percent (0.5%) of said NSR can be repurchased by the Subsidiary Company, as applicable, for an amount of five hundred thousand dollars ($500,000).

GEOLOGY AND MINERALIZATION

The Property encompasses a lithologic context similar to the Cass Berardi deposit. Its exploration history followed the same stages of evolution over a period of time from the 1960 to 1990 where exploration focued sulfide rich polymetallic deposits similar to the Kidd Creek, Selbaie, or Mattagami deposits discovered in the northern part of the Abitibi belt. Exploration work on the claims was done by companies such as Newmont, Noranda, and Cambior, among others.

Following the discovery of gold close to the Casa Berardi fault in 1981, various geophysical surveys were done on the Property as well as soil and rock chip sampling and drilling looking for similar targets. The historical gold potential appears to be located inside the Kama faults and related anomalies corresponding to a three kilometer by two kilometer area where disseminated pyrite and arsenopyrite concentrations were found in carbonated andesite along flow contacts. Over a period of 45 years, about 23,000 meters of drilling was done on the Property in 47 drill holes. The Vendors have compiled a significant database of information and conducted recent geophysics work that will aid Emgold in its exploration efforts.

 

RESOURCES

The Casa South Property is an early stage exploration Property, and no NI 43-101 compliant resources exist at this time.

MINING

No mining activity has occurred on the Property to date. There are currently no mineral reserves.

METALLURGY

No metallurgical work has been done on the Property.​

CONCLUSIONS

The Casa South Property is an early stage exploration property. It is located to the south of the producing Casa Berardi Mine and appears to have similar parallel structures to those found at Casa Berardi. Historic exploration work by others includes soil sampling, rock chip sampling, geophysics, and diamond drilling. Potential exists for discover of both structurally controlled gold deposits as well as sulphide rich polymetalic deposits.

QUALIFICATION

Technical information included on this web page has been reviewed and approved by Alain Moreau, P.Geo., a Qualified Person as defined by National Instrument 43-101.

REFERENCES

None.

DISCLAIMER

Readers are cautioned to review the Disclaimer Page on this website for qualifications that may be applicable to the information contained on this Project Page, including Forward Looking Statements.