7th March fast approaching.....
Terms of Farm-In Agreement
Stage 1 (30% interest)
Olympic Domain Pty Ltd (Olympic DomainorODPL) grants CHK the right, but not the obligation, to acquire a 30% interest in the ODPL tenements (Stage 1 Interest) by:
- incurring expenditure of not less than $500,000 within 1 year of the execution Farm-In Agreement (Stage 1 Period); and
- making a payment to Olympic Domain within 5 business days of the execution of the Farm-In Agreement of a maximum of $100,000 as reimbursement of expenditure incurred by Olympic Domain directly in connection with the development of the tenements prior to the date of the Farm-In Agreement (the payment being subject to provision of reasonable supporting documentation confirming the expenditure).
Stage 2 (51 interest)
Subject to CHK earning the Stage 1 Interest, Olympic Domain grants CHK the right, but not the obligation, to acquire a further 21% interest in the ODPL tenements (Stage 2 Interest)by:
- incurring aggregate expenditure (including expenditure incurred in connection with obtaining the Stage 1 Interest) of not less than $1,000,000 within 2 years of the execution of the Farm-In Agreement; and
- making a payment to Olympic Domain within 10 business days of the date on which it earns the Stage 1 Interest of a maximum of $100,000 as reimbursement of expenditure incurred by Olympic Domain directly in connection with the development of the ODPL tenements prior to the date of the Farm-In Agreement (the payment being subject to provision of reasonable supporting documentation confirming the expenditure).
Stage 3 (80% interest)
Subject to Cohiba earning the Stage 2 Interest, Olympic Domain grants Cohiba the right, but not the obligation, to acquire a further 29% interest in the ODPL tenements (Stage 3 Interest) by incurring aggregate Expenditure (including expenditure incurred in connection with obtaining the Stage 1 Interest and Stage 2 Interest) of not less than $1,500,000 within 3 years of the date of the Farm-In Agreement.
Minimum Expenditure
CHK has agreed to it will incur expenditure of not less than $500,000 in the Stage 1 Period (Minimum Expenditure) provided that CHK is relieved from this obligation (and its obligations to make any payment under (e) below) to the extent that its ability or capacity to make the Minimum Expenditure is adversely affected as a result of a breach of warranty by Olympic Domain, a force majeure event or a breach by Olympic Domain of a material term of the Farm-In Agreement. The warranties provided by Olympic Domain include warranties under which it has agreed to: (i) obtain all permits, consents and approvals necessary to permit the timely conduct of exploration programs agreed during the farm-in period; and (ii) obtain approvals for extensions or waivers of timeframes for annual or periodic expenditure requirements sufficient to enable CHK a reasonable opportunity to pursue and obtain the earn-in rights granted to it under the Farm-In Agreement.
Withdrawal Prior to Minimum Expenditure
If CHK does not incur the Minimum Expenditure, subject to the circumstances in which it may be relieved of its obligations as referred to in paragraph (d) above, CHK must pay an amount of $300,000 to Olympic Domain. This sum is payable (at CHK’s election) in cash, shares, or a combination of shares and cash. If shareholder approval is required for the issue of shares CHK has agreed to endeavor to obtain that approval in an expedient manner.
Withdrawal and Surrender
Subject to the above, the Farm-In Agreement provides that CHK may elect not to incur expenditure and to withdraw from the Farm-In Agreement at any time prior to earning the Stage 1 Interest, Stage 2 Interest or Stage 3 Interest whereupon its unexercised earn-in rights lapse.
(20min delay)