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Vanstar amends terms for IAMGOLD's Nelligan earn-in, ups cash payments

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Vanstar amends terms for IAMGOLD's Nelligan earn-in, ups cash payments

Vanstar Mining Resources Inc. said Feb. 27 that it executed an amended agreement with IAMGOLD Corp. for the latter's option to earn up to an 80% stake in the Nelligan gold project in Quebec, reflecting increased cash payments, among other items.

Under the amended deal, IAMGOLD was given the exclusive and irrevocable first option to acquire a 51% interest in the project by paying Vanstar an additional C$2.2 million. The initial agreement, signed in November 2014, only required IAMGOLD to pay C$550,000 and spend C$4 million on property exploration by May 12, 2019, to earn a 50% stake in Nelligan.

Upon completion of the 51% earn-in, IAMGOLD will have paid Vanstar about C$2.6 million in cash and spent over C$4 million on exploration at the project.

As part of the revised agreement, IAMGOLD can raise its project stake by a further 24% by paying about C$2.8 million more and completing a National Instrument 43-101-compliant resource estimate technical report for the project before March 2022. The cash payment will be made in four tranches, and IAMGOLD will be given until the deal's fourth anniversary to fulfill these conditions should the company proceed with the second earn-in.

After securing a 75% stake in Nelligan, Vanstar will cancel a 1% net smelter royalty over the project from the 2% NSR it acquired from two independent prospectors in February 2017. This will leave Vanstar with a 1% NSR and a 25% ownership in the property, but if IAMGOLD does not exercise the second earn-in, Vanstar will have the right to buy back IAMGOLD's stakes for a sum equal to the exploration expenses the company spent on Nelligan.

Finally, the last earn-in stage allows IAMGOLD to raise its Nelligan ownership to 80% by completing a feasibility study on the project. IAMGOLD plans to start a new 12,000-meter drill program at Nelligan as soon as it secures a permit to install a temporary camp for the drilling contractor workers.