TerraX Minerals Inc. (TSX-V: TXR; Frankfurt: TXO) and Alberta Star Development Corp. (TSX-V: ASX; OTC BB: ASXSF; Frankfurt: QLD) are pleased to announce that they have entered into an indicative term sheet pursuant to which Alberta Star can earn up to a 60% in TerraX’s wholly-owned Central Canada gold project (the “Central Canada Property”) in Ontario (the “Option”) and will subscribe for 1,300,000 units of TerraX “Units”) at $0.45 per Unit for gross proceeds of $585,000 (the “Private Placement”). Each Unit will consist of one common share and one-half of one share purchase warrant, with each full warrant entitling the holder to purchase an additional common share at an exercise price of $0.57 per common share for a period of two years from the date of closing. No finder’s fees are payable in connection with the Private Placement.
In order to exercise the Option, Alberta Star must make cash payments to TerraX totaling $85,000 over a three year period, with $10,000 due upon execution of a definitive option agreement (the “Option Agreement”), $25,000 due on the second anniversary of the execution of the Option Agreement (an “Anniversary Date”) and a further $50,000 due on the third Anniversary Date. Alberta Star must also incur an aggregate of $500,000 in exploration expenditures over a three year period, with $100,000 due on the first Anniversary Date, $150,000 due on the second Anniversary Date and a further $250,000 due on the third Anniversary Date. Albert Star will also be responsible for payment of the annual pre-production royalty of $10,000 to the original vendors of the Central Canada Property due annually in December beginning with the next payment due on December 11, 2014.
The Option and the Private Placement are subject to execution of the Option Agreement, execution of a definitive subscription agreement in respect of the Private Placement and acceptance of the TSX Venture Exchange. The net proceeds of the Private Placement will be used by TerraX to finance additional drilling planned for Terrax’s wholly-owned Northbelt property, which encompasses 3,562 hectares on the prolific Yellowknife belt, 15 km north of the city of Yellowknife, and covers 13 km of strike on the northern extension of the geology that contained the Giant (7.6 Moz) and Con (5.5 Moz) gold mines. The Northbelt property is host to multiple shears that are the recognized hosts for gold deposits in the Yellowknife camp and it contains innumerable gold showings.
Mr. Stuart Rogers, a director and the Chief Financial Officer of TerraX, is also a director and the President and Chief Executive Officer of Alberta Star. Mr. Rogers beneficially owns or controls 855,000 common shares and 447,500 securities convertible into common shares of TerraX, representing 2.06% of the outstanding common shares of TerraX on a non-diluted basis and 3.11% of the outstanding common shares of TerraX on a diluted basis. Mr. Rogers beneficially owns or controls 339,000 common shares and 300,000 securities convertible into common shares of Alberta Star, representing 1.56% of the outstanding common shares of Alberta Star on a non-diluted basis and 2.89% of the outstanding common shares of Alberta Star on a diluted basis. TerraX does not own any securities of Alberta Star and Alberta Star does not presently own any securities of TerraX. Assuming completion of the Private Placement, Alberta Star will own 3.04% of the outstanding common shares of TerraX on a non-diluted basis and 4.49% of the outstanding common shares of TerraX on a diluted basis. Mr. Rogers has declared his interest in, and will abstain from voting in respect of, the Option and the Private Placement on behalf of TerraX and Alberta Star. The directors of each of TerraX and Alberta Star have considered the merits of the Option and the Private Placement in the absence of Mr. Rogers. The Option and Private Placement are exempt from the formal valuation and minority approval requirements of Multilateral Instrument 61-101 pursuant to sections 5.5(b) and 5.7(1).