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GGL Resources reorganizing to focus on diamond properties


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GGL Resources reorganizing to focus on diamond properties

GGL Resources Corp. plans to complete a series of transactions that will result in its core assets being diamond exploration properties in Canada's Northwest Territories.

However, the company will continue to hold the early stage McConnell Creek copper-gold property in British Columbia.

The first deal will see GGL Resources farming out its noncore Providence Greenstone Belt gold project, also in the Northwest Territories, to Silver Range Resources Ltd. to relieve property holding costs.

The company will remain the owner of the Providence Greenstone Belt properties and the associated exploration camp and will also retain the right to explore for diamonds in the project area.

Silver Range will have an option to explore the project for all metals and minerals except diamonds in return for C$33,200 in cash upon signing a binding letter of intent and issuing 1 million common shares upon receipt of exchange approval.

Silver Range will also make a C$1.0 million milestone payment upon completion of a positive preliminary economic assessment relating to a deposit within the project.

Should Silver Range define mineral resources at Providence Greenstone Belt, it will grant a 1% net smelter royalty to GGL Resources on metal or mineral production excluding diamonds. Half of the royalty can be purchased by Silver Range for C$1.0 million.

GGL Resources is also planning to undertake a share consolidation on a 1-for-5 basis to reduce its currently issued 35,484,738 shares to about 7,096,948 shares.

After the share consolidation, GGL Resources will complete a private placement to raise up to C$1 million, with Strategic Metals Ltd. participating as lead investor.

As a result, Strategic Metals will become a new control person of GGL Resources, as its stake in the company will increase to more than 20%, with a special shareholders meeting planned to approve the change.

Strategic Metals will have the right to nominate three members to the GGL Resources board, which will comprise five directors, with a Strategic Metals nominee to be appointed as president and CEO of GGL Resources.

Strategic Metals also provided a non-interest bearing loan of C$100,000 to GGL Resources to finance the latter's administrative, legal and accounting expenses prior to completion of the private placement. The loan is secured against the McConnell Creek property and will be repaid with proceeds of the private placement.