According to a release, as of January 8 this year Shoreham Resources Inc of Canada has been granted the option to acquire all of the “issued and outstanding shares” over a 10,427 acres property in the Essequibo area in which Mariwa holds a 100% interest.
Mariwa Mining Company Inc, of which Lumumba and former Guyana Geology and Mines (GGMC) Commis-sioner Dr Grantley Walrond are principals, and Shoreham Resources have been pursuing the deal since last year and it raised eyebrows within the mining sector here when it was made public last December, soon after the GGMC granted a prospecting licence to Mariwa over the Sardine Hill property.
Shoreham has provided details of the definitive agreement which Mariwa will benefit financially from. Over a five-year period the principals of Mariwa will be paid an aggregate of US$1 million and will issue an aggregate of 1.5 million common shares.
Shoreham will complete an initial exploration programme in accordance with GGMC regulations and the company will incur expenditure not less than US$700,000 on the property prior to the first year anniversary of the License Grant Date.
Stabroek News had reported earlier this year that Walrond was expected to be retained by Shoreham as a consultant. According to the release, Walrond will be retained as a technical consultant to the company for an 18-month period from the date of execution of the agreement.
A clause in the agreement, in which Mariwa will benefit from a US$250,000 cash payment in exchange for “certain historical exploration data in respect of the property,” also remains intact. Persons within the industry have questioned this aspect of the agreement, since according to them, such data should have been made available to the interested party, in this case Shoreham, with no fee attached.
Another condition of the definitive agreement, is that in the event Shoreham files a National Instrument 43-101 complaint technical report (which identifies proven and probable mineral reserves) containing an aggregate more than 1 million troy ounces of recoverable gold, the company will pay $200 million to Lumumba and Walrond within 20 business days of the date on which the company files such a report.
Shoreham has also agreed to grant to the principals of Mariwa, a 3% net smelter returns (NSR) royalty on the Sardine Hill property and the company will have the right to repurchase the NSR Royalty for a period of five years from the date the licence was granted. Repurchase of the NSR Royalty will be at a rate of US$1 million for the first percentage of the NSR Royalty, US$2 million for the second percentage and US$3 million for a further third percentage. One condition of the latter stipulation is that if Shoreham fails to repurchase the first and second percentage points of the NSR Royalty by the fourth anniversary of the license grant date, the cost of repurchasing the third and final percentage point will be increased to US$3.5 million.
Shoreham has also agreed to pay a finder’s fee to “an arm’s length independent third party” whose role was instrumental to the transaction, the company stated.
Sources within the mining industry here told Stabroek News earlier this year that the Sardine Hill property had been a controversial issue ever since its previous owner, Roraima Investments, a local company headed by Walrond acquired ownership of it in the early 1990s. Roraima Investments lost ownership of the property and it was subsequently reclaimed by the GGMC owing to the non-payment of rentals, which amounted to some $25 million a source related.
According to a source, in 2007, Afro Alphonso and Chunilall Babulall of the C&BR mining company based in Bartica, paid a sum of $80 million to the GGMC for the property but the execution of the sale was halted after Roraima Investments secured an injunction from the courts restraining the mines commission from continuing with the sale. Alfonso and Babulall subsequently discontinued the arrangement and reclaimed the sum paid on the property from the GGMC, and after a year, were paid the sum in full.
Lumumba, of McNeal Enterprises, the initial owner of the property, and Walrond petitioned President Bharrat Jagdeo thereafter and a decision was subsequently handed down in which, Mariwa, a newly formed company headed by Lumumba and Walrond, was granted ownership of the property. The President later defended the deal at a press conference stating that petitions are “routinely” made to him and the one that led to the granting of a prospecting licence to his presidential advisor Lumumba was a “reinstatement” which benefited from the advice of Prime Minister Samuel Hinds, who holds responsibility for the mining sector.
Meantime, Shoreham and another overseas based company, Mulgravian Ventures Corp are currently negotiating the terms of a definitive agreement which will supersede a Letter of Intent (LOI) signed initially between the two parties. Shoreham will grant Mulgravian the option to acquire a 51% working interest in the property. Shoreham plans to use the funds generated by its Mulgravian ventures to fund certain aspects of the company’s financial obligations under the Sardine Hill Agreement for ongoing corporate expenses and to advance other mineral exploration projects here.
The Sardine Hill Agree-ment and the Mulgravian LOI and other transactions remain subject to the approval of the TSX Venture Exchange.
