Meunier JV Property
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OPTION AGREEMENT
On May 6, 2010, RTM announced that it had entered into an option agreement and future first right of financing related to the Adventure Gold Inc. (TSX.V: "AGE") Meunier JV Property, Ontario. This property is contiguous to the western boundary of Lake Shore Gold Corp. (TSX: "LSG") Timmins Mine property and approximately 800m north west, at surface, from the LSG Rusk Zone where LSG has reported drill intersections up to 12.75 gpt Au over 83.40m.
RTM may acquire up to 50% of AGE's Meunier Property and as at December 31, 2010 LSG may in turn acquire up to 10% of the Meunier Property and up to 50% of RTM's 50% interest, when earned by RTM, in Meunier.
As part of earning its interest in Meunier, RTM subscribed for 1,000,000 units at $0.20 per unit of AGE. Each unit consists of one share at $0.20 and a half warrant attached to each share. Each full warrant entitles the holder to acquire a further share of AGE at $0.27 per share for a two year term.
In addition, RTM paid AGE $300,000 cash, 2,500,000 shares of RTM and will incur $1,500,000 in firm exploration costs on the AGE Property within 18 months of signing the option agreement, whereupon RTM will have earned a 25% interest in the AGE Property. In order fo RTM to earn up to a 50% interest in the AGE Property, RTM will incur a further $1,500,000 in optional exploration expenditures and pay a further 250,000 shares of RTM within the next 42 months. RTM will act as Operator along with LSG acting as field manager for at least the first 18 months of the firm exploration expenditure on the Meunier property. As consideration of the RTM firm commiments, AGE has granted RTM 500,000 compensation warrants of AGE. Each AGE warrant owned by RTM is exercisable into one share of AGE at $0.20 per share for a one year term.
LSG will have a first right to all future production financing, debt or equity financing by RTM or AGE regarding the AGE Meunier Property for such time that the above option agreement is in good standing or RTM or LSG own an interest in the Meunier property.
For such time that the option agreement is in good standing and for a period of up to 10 years, LSG may earn a 10% interest in the AGE Property by LSG carrying out a Preliminary Assessment on any NI 43-101 resources identified by RTM or AGE on the Meunier property and by reimbursing RTM and/or AGE for any costs associated with the initial NI 43-101 report. LSG has agreed to employ its best efforts to integrate any compatible ore discovered on the Meunier property into LSG milling facilities in the Timmins camp, at LSG's custom milling costs and fees. Such custom milling not to adversely interfere with 100% owned LSG ore processing.
In addition, pursuant to the December 30, 2010 transaction with LSG, the Company has issued to LSG 10,000,000 shares, and transferred its interest in the Golden Property near Timmins, Ontario and up to 50% of RTM's earned interest in the Meunier JV property to LSG in consideration for the transfer to the Company by LSG of a 100% interest in the advanced stage Bazooka gold property in Quebec and the McWatters gold property in Quebec, as well as LSG agreeing to reimburse the Company for $500,000 in exploration expenditures in 2011 following the Company incurring a further $1,000,000 in exploration on the Meunier JV property.
PROPERTY DESCRIPTION
The Meunier JV Property primarily covers a sequence of volcanic rocks located on the north side of the West Timmins sedimentary basin and along the west extension of the Bristol fault from the Timmins Mine and Thunder Creek properties where Lake Shore Gold is currently developing a large scale mining operation. The key initial target for exploration on the Meunier property include the down plunge extension of gold zones located at the Timmins mine and Thunder Creek deposits including a pronounced "Fold nose" structure thought to control the bulk of gold mineralization at the Timmins mine and where LSG recently announced discovery of a second fold nose and significant new gold intersections approximately 600 meters east of the boundary with the Meunier property (see LSG press releases November 24 2010, November 1 2010, August 30 2010 and August 10 2010). Additional targets to be tested will include the projected down plunge extension of the Rusk horizon as well as new targets to be defined by surface exploration along the west extension of the Bristol fault. The initial drill program on the Meunier JV Property will consist of about a 3,400 meter drill hole designed to test both the fold-nose feature and the Rusk horizon below the 2,000 meter level along projected trends defined by LSG as well as one to two wedge holes to test along strike and dip. Coincident with this, some work will be undertaken to evaluate programs for surface mapping, sampling and geophysics. LSG will manage and supervise the above programs.
The initial deep hole has presently passed approximately 3,100m in core length. This initial master hole is expected to be completed by the end of 2011.