Chesapeake Gold to sell Tatatila gold-copper project

Executive Summary

• Chesapeake Gold Corp. entered into a definitive agreement to sell its Tatatila gold‑copper project in Veracruz, Mexico, to Mexican Gold Mining Corp. (TSX‑V: MEX).
• Consideration will be 14.99 % of the outstanding common shares of Mexican Gold at closing plus a 1.5 % net smelter return royalty (which may be reduced to 1.0 % if Mexican Gold repurchases 0.5 % for US$500,000 within ten years).
• The consideration shares are subject to a lock‑up and statutory hold period, with staged releases beginning one year after issuance and full release by 2.5 years; Chesapeake will vote the shares per Mexican Gold’s instructions for that period.

Key Details

• Transaction Structure: Sale of Tatatila project in exchange for equity (14.99 % of Mexican Gold) and a royalty on net smelter returns.
• Royalty Terms: Initial 1.5 % NSR royalty; Mexican Gold may repurchase 0.5 % of the royalty for US$500,000 within ten years, reducing it to 1.0 %.
• Lock‑up Schedule: Shares subject to statutory four‑month‑and‑one‑day hold period plus additional lock‑up; 25 % released on the one‑year anniversary and every six months thereafter; full release by 2.5 years after issuance.
• Voting Agreement: Chesapeake will vote its consideration shares in line with Mexican Gold management instructions for a 2.5‑year period.
• Project Background: Tatatila is a gold‑copper skarn district identified in 2007, surrounding Mexican Gold’s Las Minas project (which has an NI 43‑101 resource estimate and PEA). Chesapeake discovered several skarn prospects on Tatatila, including potential extensions to the Las Minas resource.
• Closing Conditions: Transaction pending TSX Venture Exchange approval and customary closing conditions for such a deal.

Notable Quotes

(No direct quotes were provided in the release.)