Yellowknife, Northwest Territories - TerraX Minerals Inc. (TSX.V: TXR; OTC Pink: TRXXF; Frankfurt: TX0) has completed the previously announced grant of an option to Osisko Gold Royalties Ltd (formerly Virginia Mines Inc.) ("Osisko") (TSX: OR) to purchase an additional 1.0% net smelter return royalty ("NSR") on its wholly-owned Yellowknife City Gold Project ("YCG") in the Northwest Territories, including a surrounding area of interest. To obtain this option, Osisko has paid TerraX $1 Million in cash. The option entitles Osisko to purchase a 1.0% NSR on production from the properties that comprise the YCG by payment of an additional $2 Million within 3 months following commencement of production. This 1.0% NSR is in addition to Osisko's existing option to acquire a 2% NSR on YCG, including a surrounding area of interest (subject to underlying royalties to certain property vendors and payment of $2 Million within 3 months following commencement of production from those properties).
In conjunction with the acquisition of the option, Osisko has also completed the previously announced private placement of 6,250,000 flow-through shares at $0.40 per share for gross proceeds of $2,500,000. The shares are subject to a hold period expiring on October 18, 2015. Osisko now owns 17.21% of the common shares of TerraX along with warrants exercisable to purchase an additional 2,243,463 shares of TerraX. Osisko has also been granted rights to participate in future production royalties held or created by TerraX following the Private Placement and pro rata financing participation rights. Osisko will be entitled to nominate one (1) director who will be put forward and included in management's nominees for directors at any meeting of TerraX shareholders, as long as Osisko holds at least 10% of the issued and outstanding TerraX Shares on a non-diluted basis.
The proceeds of this private placement, along with the $2 Million flow through private placement completed by TerraX earlier this month and additional subscriptions scheduled to close shortly, will be used for eligible Canadian Exploration Expenses on the YCG, where technical staff from Osisko are currently in the field assisting TerraX personnel mapping and prioritizing drill targets for drilling scheduled to start-up in mid July.
Joe Campbell, President of TerraX, stated, "TerraX has always been committed to putting our dollars into the ground where they have the best chance of returning value to our investors. Now, in the midst of historically difficult capital markets for junior mining companies, TerraX has more exploration funding available than at any time in the history of the company. This funding, along with our technical partnership with Osisko, gives TerraX the financial means to effectively explore the world class potential of the Yellowknife City Gold project."