Voyageur Minerals Ltd. signed a nonbinding letter of intent with Calgary, Alberta-based Chief Medical Supplies Ltd. to form a joint venture over the Francis Creek barite property for the manufacture and distribution of barium contrast solutions.
Chief Medical will be responsible for the sales, marketing, distribution and packaging together with permitting of the product in Canada, Europe and the U.S.
To earn a 10% stake in the joint venture, Chief Medical has to complete product composition in the first six months from the signing of the definitive agreement. In one year from the signing, Chief Medical has to get permits for Canada, upon which it will earn an additional 10%. Within two years from signing, first sales and the expenditure equal to Voyageur's capital cost, Chief will earn an additional 30% of the joint venture.
The company said Aug. 14 that it has to supply suitable barite for producing the contrast solutions as well as an estimated C$13 million to put the project into production after a positive feasibility study is completed. The company has spent C$1 million of the total cost already, and Chief Medical needs to spend the same amount to earn a 50% interest in the joint venture.
The C$13 million capital estimate may increase or decrease based on the production engineering and must be matched by Chief Medical for the earn-in.
Subsequent to the full earn-in of 50%, Voyageur's Frances Creek barite property will be owned by the joint venture.
Before the full earn-in, Voyageur has to provide product for testing, engineering and other direct costs, which will be charged to the joint venture.