Harfang signs option with Fancamp for Egan project

Executive Summary

• Harfang Exploration Inc. has entered into a definitive option agreement with Fancamp Exploration Ltd. to allow Fancamp to earn up to an 80% interest in Harfang's wholly owned Egan gold project in Ontario.
• The deal structure allows Fancamp to initially earn a 40% interest, with Harfang retaining 60%. Harfang holds an option to convert the second earn-in phase into a 51%/49% joint venture in favor of Fancamp.
• To earn the full 80% interest, Fancamp must fund $4 million in exploration expenditures over four years and make cash/share payments totaling between $100,000 and $200,000 to Harfang.

Key Details

• Transaction Structure:
  • Initial Earn-in: Fancamp earns a 40% undivided interest; Harfang retains 60%. Fancamp acts as operator.
  • Second Option (Harfang's Choice): Harfang may elect to convert the second option into a 51%/49% joint venture in favor of Fancamp. If exercised, parties proportionally finance $2.5 million in exploration, then share costs pro rata.
  • Second Option (Fancamp's Choice): If Harfang does not exercise its conversion option, Fancamp may earn an additional 40% (totaling 80% for Fancamp, 20% for Harfang). Fancamp remains operator.
• Financial Consideration & Expenditures:
  • Total Exploration Funding: $4 million over four years to earn the full 80% interest.
  • Cash/Share Payments to Harfang: Minimum $100,000, maximum $200,000 over three years.
  • Payment Schedule (First Option): $100,000 total ($50k cash/share on effective date; $50k cash/share within 5 days of first anniversary). Requires $1.5 million in exploration expenditures within two years.
  • Payment Schedule (Second Option): Additional $100,000 total ($50k within 5 days of exercising option; $50k within 5 days of third anniversary). Requires additional $2.5 million in exploration expenditures by the fourth anniversary.
  • Share Consideration: Issued at VWAP over 10 trading days prior to issuance, subject to TSX-V minimum price rules.
• Project Details (Egan Project):
  • Located in Ontario's Abitibi greenstone belt, covering 449 claims (~12,000 hectares).
  • Located between Timmins, Kirkland Lake, and Matachewan gold camps.
  • Subject to a 2.0% NSR royalty on certain claims.
  • Historical Sampling Results:
    • E1 Zone: Grab samples up to 105.0 g/t Au.
    • E1S Zone: Grab samples up to 25.0 g/t Au.
    • E2 Zone: Up to 19.3 g/t Au.
    • E3 Zone: Grab samples returned 44.7 g/t Au and 19.0 g/t Au.
• Regulatory Status: Agreement is subject to TSX Venture Exchange approval; effective date is the date of final approval.

Notable Quotes

• "Egan is the latest project that reflects our strategy of advancing quality assets through smart partnerships that deliver results in the field and value for our shareholders. This agreement builds momentum and gives us the flexibility to ramp up exploration and test the high-potential targets that Harfang and Fancamp believe could lead to a significant gold discovery." — Rick Breger, President and CEO of Harfang